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Tuesday, August 8, 2017

Greetings Thrifty Friends,

Everybody knows that the rich are getting richer while the poor are getting poorer. We call it the wealth gap and it is getting wider, but did you know that it wasn't always like that? In fact, as recently as the 1980s the bottom 90 percent saw its wealth grow at real annual rate of 3 percent, compared with 0.3 percent for the top percentile, according to new research released last month.

That is almost the opposite of what it has been since the 1990s.

So how has it happened? Certainly income has a lot to do with it. The typical family isn't making any more than it was in the 1990s. But just as importantly, middle-class savings have plummeted.

In the last 30 years, the savings rate for the bottom 90 percent has fallen from 6 percent to negative 4 percent. It now hovers near zero.

Keep pinchin' those pennies,

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If the bottom 90 percent had continued to save 3 percent of its income over the 1986 - 2012 period, its share of US wealth would be a third higher than it is today.

Saving is essential. Even something as simple as direct deposit can change the way we think about saving. If you have a portion of your paycheck directly deposited into a savings account you will soon stop thinking of it as spendable income.

Some credit card companies help their customers automatically pay off their cards, utilities, and other fees.

And 401ks, IRAs and CDs are also great tools for long-term savings.