Spend, spend and spend again

Scots once had a reputation for prudence - and I'm not talking about Gordon Brown here! It is claimed that a generation of spendthrifts is heading for financial disaster by failing to save:

The major analysis of spending habits uncovered a generation of young people in Scotland who have lost their parents’ instinct to save for the future. It shows they would rather spend their money on alcohol, fast food, fashion accessories and mobile phones than build a nest egg.

But are young people really to blame?

"Perhaps younger people look at their parents and realise that they have spent their lives saving and don’t have much to show for it. Their pensions may be worthless, which makes young people think it is a waste of time to build a nest egg. Instead, they decide to spend the money while they are young and can enjoy it. Their thinking is that they will worry about it in the future," she said.

The government has harmed private pensions by abolishing tax relief on dividends and by increasing red tape on productive companies. Clearly, inflation is on its way back big-time - how else will we pay for the chancellor's spending plans? Increasing inflation will reduce the value of any savings one may make for retirement. On top of that, the benefits system makes it not worth investing in a pension fund unless a very sizable sum can be amassed. So maybe the young folk are right: eat, drink and be merry while you can and, if you're really clever, get a job with the government and all your pension problems will be solved. Until the country goes bust, that is.