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28% of Americans have no emergency savings
According to a recent survey, most Americans don’t have enough money set aside for an emergency. In fact, more than 25 percent don’t have any money saved!
It’s recommended that you have an emergency fund that can cover at least six months of expenses. Only 25 percent of Americans have that kind of cash set aside. The research was conducted by Bankrate.com.
“About 49% of Americans don’t even have enough money saved to cover three months of expenses — slightly worse than the 46% of Americans who reported having less than three months worth of savings last year.
And 28% don’t have any cushion whatsoever — up from 24% last year, according to the report, which was based on a survey of 1,000 adults.“ (Read the CNNMoney article.)
Those who have saved are predominantly older, wealthier Americans. For people aged 65 or older, 39 percent say they have at least six months of savings set aside. Fifteen percent say they have no savings at all.
It’s worse for younger Americans. For those between the ages of 18 – 29, a large chunk – 35 percent – say they have no savings at all. However, 63 percent say they could last for 3 months on their savings.
“The biggest barrier to saving is not being in the habit of saving,” senior financial analyst Greg McBride of Bankrate said. “By establishing that habit, even if an unplanned expense comes up and wipes out what you’ve accumulated, you’re only one paycheck away from restarting the saving process.”The report also demonstrated that families are saving more this year than they were during the last six years. In 2006, a similar report by Bankrate found that 61 percent of Americans didn’t have enough emergency money to last three months.
McBride recommends setting up a direct deposit account from your paycheck that funnels into an account dedicated just to savings each month. That way you’re never tempted to keep the money.
Interestingly, another report by Rasmussen Reports also showed that 43 percent of Americans will go at least a week without any hard cash on hand. They will instead use cards or checks.
A 2011 study found that people who use cash are more likely to think about a purchase’s cost while those who buy with a card tend to think more about the benefits of the purchase – and tend to pay more.
If you use cash, ask for a discount. Visa and Mastercard changed their rules in 2010, permitting merchants to cut prices for customers with legal tender. Some stores will knock off 2 or 3 percent, according to SmartCredit.com CEO John Ulzheimer.
I disagree in part with this article. The biggest barrier to savings is many Americans barely earn enough to live from week to week. Putting 5 dollars aside today might mean not buying a gallon of milk for your kids, or the gallon of gas that will get you to your job tomorrow. Yes, it really is that hard out there. I’ve tried asking merchants to discount for cash and have never had any success. They look at you like you have 3 heads. Same thing with asking for a discount on a floor model. No luck there either. I’d like to know what merchants were surveyed for this article. Maybe I’d shop there!
June 26th, 2012 at 9:54 amWhile many Americans barely squeek by on meager earnings, I don’t see that as the biggest barrier to savings. I think it’s the sense of entitlement. People think that just because they work hard, they are entitled to what they want and need. My husband and myself live in the next to the last poorest state (Arkansas), have no college degrees, and have always had low paying jobs. We have more than an 8 month savings to tide us over. It has taken us decades to build it up. The amazing thing is, that we built it as I went to college (without working), while our son got his college education (he’s now a PhD from a top university), and while my husband lost his job of 30 years (and was without work for almost 2 years), along with his retirement and health insurance (he has leukemia and I am disabled and loosing my eyesight, so we have huge medical bills). We did without so many things that others consider essential: no vehicles under 12 years old, no fresh milk (only powdered), meatless meals, no vacations–ever, no cell phones, no cable tv, no smoking or drinking, no make-up, no new clothes, no new furniture, no help from anyone, no family to smooth the rough times, no begging from churches or charities, no eating out, no air conditioning (it was 109 degrees here the other day), even no medications though the dr’s said they were essential. We scrimped and saved, and we worked multiple low paying jobs simultaneously–jobs others would not even consider. At times, the three of us were working 9 jobs and getting little sleep. There were months that if we saved $5, it was a victory–we persevered. I grew a garden even though we lived in the city (tomatoes in window boxes, peppers along shrubs, cucumbers up a trellis next to the house, etc; I canned and froze produce. We picked blackberries along ditches by the side of the road. I never turned down anything offered to us: even though we don’t like turnips, they were food; clothes given were remade into PJs, shirts were cut down and remade smaller, Ts made into rags so there’d be no need for paper towels, plastic bags crocheted into rugs. I could go on and on, but my point is: we were determined to look outside the box and we did whatever we could to make it happen–things that others refused to even consider. We didn’t like doing them, but you have to be disciplined enough to do them anyway. And yes, it means giving up things, like milk for the kids and gas for the car (walk to work), and not relying on others to do things for you, like giving you a discount on a new whatever that you can do without. We even lost freebies that others got: help with utility bills, grocery give-a-ways, food stamps, free school meals, etc, because we now had some savings–and believe me, others who made more than us took advantage of those things that we couldn’t get. Nothing in life is fair–choices must be made. I can tell you this: when my husband lost his job (the company moved to Mexico), we lived off his umemployment checks without touching our savings; others who lost their jobs with him, rather than cut back, used up all their savings, cashed out their 401Ks, signed up for the freebies, and turned down jobs they saw as beneath them. How could they ever expect to build an emergency savings when money slips through their fingers? I will say, that if things get much worse, I don’t know what we will do. In spite of having over a year’s emergency fund, one bout of my husband’s leukemia can wipe us out and cost us everything. People who think there’s no need for a national health insurance or that it will never happen to their family are ignorant of reality–their job (along with their health insurance and security can easily be gone tomorrow, despite the best of planning.
July 25th, 2012 at 11:28 am