Germans are saving twice as much of their disposable income as their American counterparts. In 2015, German households set aside 10% of their disposable income while Americans saved only 5.5%. Germans tend to save more, purchase less on credit and take out fewer home loans than their American cousins. While Germans enjoy free healthcare and college tuition, Americans fund these services from their own pockets. Wouldn’t the added expense encourage Americans to put more funds aside for healthcare and college tuition? The opposite is true. Why?
Birth of the German saving culture
Germans have a long history of saving. The worlds’ first savings bank was founded in Hamburg in 1778. https://www.ft.com/content/c8772236-2b93-11e8-a34a-7e7563b0b0f4 Its purpose was to provide an avenue for the urban poor to save a few extra pennies for their children’s education and for rainy days. But the idea took hold far beyond the urban poor. Suddenly, savings accounts mushroomed all over Germany. By 1875, at least a quarter of the population had savings accounts. Schools began teaching the concept of saving to children and introduced special school savings banks. With the German unification of 1871 saving deposits began to be seen as a service to the nation because they allowed local banks to make them available to municipalities for the construction of canals, roads, electric works, gas works, schools, theaters and public parks.
Germans are saving twice as much of their disposable income as their American counterparts. www.walled-in-berlin.com
During World War I, the German government encouraged people to invest their savings in war bonds. But with the demise of the Weimar Republic people saw their savings deposits erode and finally be wiped out entirely by the hyperinflation of 1923. During the Nazi period that followed, Germans began to save all over again. Those savings, too, were wiped out by inflation, the currency reform and the introduction of the Deutsche Mark in the aftermath of World War II. Soon afterwards however, people started saving again because, apparently, the idea of savingwas deeply ingrained in the German culture by now. It is a habit that starts in childhood. When I was a little girl growing up in Berlin, I too, had a savings account in my name at our local bank. Whenever I had accumulated the miniscule sum of One Mark after rigorous penny-pinching, I deposited that money in my savings account. I was proud to watch my savings account grow. As far as I was knew, money belonged in the bank.
Saving Culture in German government
Financial discipline isn’t just considered a virtue on a personal level. One of the German government’s goal each year is to present a debt-free budget. It is referred to as “Black Zero” (Schwarze Null), which means being in the black. German finance ministers earn the support of voters not by promising tax cuts and spending increases, but by proving their commitment to fiscal discipline. In the United States, on the other hand, savings are equated to a lack of consumption and poor demand. Most of the US economy is driven by credit and debt. Heavy marketing also encourages Americans to spend rather than to save. While Germans consider saving the right thing to do, Americans consider taking on debt the right thing to do.
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Walled-In is my story of growing up in Berlin during the Cold War. Juxtaposing the events that engulfed Berlin during the Berlin Blockade, the Berlin Airlift, the Berlin Wall and Kennedy’s Berlin visit with the struggle against my equally insurmountable parental walls, Walled-In is about freedom vs. conformity, conflict vs. harmony, domination vs. submission, loyalty vs. betrayal.
Tags: Black Zero, German saving history, Schwarze Null, Weimar Republic
