Will Black Remain the New Black?

by Jason on December 7, 2009

Every season it seems like someone is declaring some new color to be the “new black”.  When it comes to personal finance, it seems this year black is the new black.

“In the black” is a corporate term that indicates a company is profitable.  In other words, they’re spending less than they make and are actually saving money.

It’s a great concept – and one that apparently the every day consumer is starting to utilize as well.

Where we’ve been

Somewhere around 2004, the US Personal Savings rate fell below zero!  For the last several years Americans spent money like it grew on trees, but now more and more people are committed to saving and eliminating debt.

They’re getting back into the black.

What happened

The 2008-09 recession (one of the worst in history) forced many people to re-evaluate their personal finace situation.  Many people have lost jobs or got salaries cut, which has forced them to reduce spending.

For what it’s worth, this recession has been a very good thing in the sense that is has shaken people up to a point where they are getting back on track with spending less and saving more!

Where we are now

This year marked the first time in 5 years that the savings rate has increased to a positive level!  This is great news from a personal finance standpoint!

In fact, economists predict our savings rate will increase to approximately three to five percent and some see it going as high as six to 10 percent!

The question is will it last?

Will it continue

I don’t know about you, maybe it’s just the critical person inside of me saying that I’m not so sure this will last.

Think about it – most folks have been so used to living beyond their means, buying everything in sight and living for today that once this initial pin-prick of a recession is over I imagine those same people wanting to resume that “fun” lifestyle they had before!

How about you?

Have you increased your savings rate?  If not, are you at least cutting back on spending and trying to knock out some debt so you can increase your savings then?

If this recession hasn’t at least taught us to build up an emergency fund and get prepared for the unexpected then I don’t know what will.

Do you think this increase in savings rates will continue?

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