September 29, 2009
This year’s dramatic shift in the economy found many Americans without a ‘rainy day’ fund. Millions of Americans lost their jobs and saw their 401(k) wiped out. It is unsurprising then to see that the trend of personal savings rate has been on a fast-pace decline since the mid 1980’s, reaching decade-low levels in recent years. The following graphic shows the trend of personal savings rate per month from 1959 to 2009, along with an alarmingly opposing trend of rising consumer debt.
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March 15, 2009
When purchasing a new product, consumers are often tempted to opt for the latest and greatest version, justifying the higher price tag with their perception of increased value. The actual value is different for each individual, and can be largely rooted in personal preference. While there are certainly benefits to most upgrades, many of these decisions are made impulsively, or based on poor logic. Is the durability of a hardcover book worth paying three times the price? Do you typically wear-out your paperbacks? It is important to consider how much of the benefit will actually be utilized to ensure that the upgrade is not merely out of desire to have the best.
A similar logic is often used upon the launch of a new product, as consumers rush to be the first to own one. These consumers can be found waiting in lines and paying high prices for buggy first versions of products that are typically made obsolete by better, cheaper versions only a few months later. This “early adopters tax” shows that patience is a virtue, especially when it comes to your pocketbook.
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February 19, 2009
That hard earned money of yours; one minute it is in your pocket, the next minute it is gone. It can be difficult to track the various expenses in your life to figure out exactly what is draining your cash. Taking a look at average consumer spending in the United States gives us an interesting insight into this matter. The comparison of different age groups shows us areas toward which people are more likely to allocate their income at various ages. The analysis of these trends can help us to determine whether each of these expenditures are necessity or frivolity.
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