While many Americans report suffering financial emergencies, a sizeable number have no emergency fund saved up.
It seems like I post a story about this every other month because new studies keep coming out that set forth the same depressing facts, Americans are not prepared because they don’t or can’t save money.
I always post about such news stories for two reasons. First, I want to point out that the media story about an Obama recovery is not very credible. We are not living in a growing economy. Second, I want to encourage readers to do all they can to break with the normal pattern of American behavior. If possible, save some money. Yes, part of the issue is a damaged economy, but bad habits also factor into what is going on.
So here is the latest from USA Today: “25% of Americans save no money for emergencies.”
This headline is better news than was reported in February, when a third of Americans were found to have no savings. But the news is still bad and it is too early to say that we are seeing improvement:
Any good financial planner will generally tell you to set aside at least three to six months’ living expenses for a rainy day. If you ever need this money, you’ll need it fast, but isn’t there somewhere better to keep it than your mattress? Here are a couple of options.
An emergency fund helps you pay bills such as your mortgage, utilities and groceries in the event you lose your job or become disabled, or to pay for an unexpected car or home repair, to name a few examples. You may need more than six months’ expenses if you lose a hard-to-find job or your household relies on one income.
If you put off this financial necessity, you’re not alone. More than one in four Americans save no money for emergencies, according to a recent Bankrate survey. About one in five people sock away enough to cover less than three months of expenses.
Yet over a third of Americans report suffering from financial emergencies. Without an emergency fund, your only option is to dig yourself into debt.
It is difficult to fight for freedom as a debt slave.