A Penny Saved is a Penny Earned

America is, among industrialized countries, one of the worst at saving for the future. While Europeans and Asians tend to save money for a rainy day, America likes to spend, spend, spend!

The adage "A Penny Saved is a Penny Earned," a favorite of Ben Franklin, encourages us to save more money. The use of a penny in the adage suggests that even saving small amounts can lead to prosperity in the future. Why, then, are Americans so unwilling to listen to this advice? I wish I knew the answer. Our culture is very focused on living in the present, entertaining ourselves, and living comfortably. We rarely think of the future unless we are complaining about the sorry state of Social Security. This is something we need to change.

Some people have questioned the very sentiment of this adage. They argue that the penny has already been earned whether it is saved or not. If the hamburger flipper at McDonald's makes $30 for one day of service, then walks next door and buys $30 of sports equipment, have they really not earned the money? Of course they have. They have just sunk it into a material product that probably will not last very long.

Perhaps the way to best look at the adage today is to think of the interest that can be earned in our capitalist society. If that same McDonald's worker put his $30 into a bank account with 3% interest, he would make about eight cents. Of course, if he left the money there for several years without touching it, the compounded interest would raise that amount. In this way, a penny saved really does earn a penny, albeit after a significant amount of time!

Regardless of the literal correctness of the statement, the message to everyone, especially Americans, is to save more money for the future. Enjoy life and be comfortable, but realize that you also want to enjoy life and be comfortable in the years ahead even if something terrible happens.