This change has been so dramatic that economists are now lamenting the “paradox of thrift”. Essentially, the argument is that even though saving more and spending less seem like smart individual decisions, widespread thriftiness can actually worsen a recession. This makes sense. If consumers are saving more money, they are spending less on goods and services. If fewer goods and services are being purchased, manufacturers make less money and need fewer workers. As more people lose their jobs, there is less aggregate income and, thus, less money to spend. As this cycle is repeated, you can see how it could create a devastating economic pattern.
My problem with this argument has much more to do with psychology than economics. It was not long ago that the news was filled with headlines like “Americans spend more than they make” and “The United States is addicted to consumerism and credit.” The media blasted us for over-spending and under-saving. Don’t get me wrong, these warnings were well placed. It is readily apparent that consumers and banks overextended themselves for much too long.
It is interesting, however, to see how much that message has changed. Consumers are now spending less and saving more, but still being criticized by economists. All the while, those who have decided to spend have found that banks refuse to loan to them. Seems like we can’t win.
The key, as we all know, is to find economic balance. We each need to save enough to be feel comfortable and to protect ourselves from unexpected life events. We need to save for retirement, education, and down payments on big purchases. We also need to live a little – enjoy life. Family, friends, love, and laughter are assets that no balance sheet can classify, but they are vitally important nonetheless. We must keep our heads about us. Moderation, wise use of credit, and thoughtful budgeting go a long way in helping families avoid the potential risks of economic booms and recessions.
Members Credit Union was formed to promote thrift among our membership and to provide an affordable source of credit for provident and productive purposes. Thanks to sound investing, strategic planning, and increased member savings activity, we have never been in a better financial position in our fifty-six years of operation. Unlike banks, we are able and willing to lend and continue to seek ways to help borrowers meet their needs. We have lowered loan rates dramatically in recent months, and continue to offer among the best deposit rates you will find on the marketplace.
While other financial institutions are clamping up operations, we are committed to making this one of our most successful years ever. Take our Invest in America program for example. We are offering huge financing specials on new American-made vehicle purchases, not to mention members-only manufacturer discounts and rebates that could save you thousands of dollars on your vehicle. Look at our “What are you saving for” program that for the last year has helped hundreds of members become better savers and smarter consumers. Not only are we still passionate about helping members in this time of need, we are eagerly creating new ways to succeed in that mission.
So, keep saving. We can help you with that. Want to borrow? We can help you with that as well. Need financial advice? Let us know. Take comfort in our financial strength, and tell your family and friends to do the same.