(Newswire.net — September 10, 2018) — If having a nest egg is meant to provide an emergency cushion and keep our lives secure in the event of hardship, a lot of Americans are sailing into the eye of the storm.
According to a recent survey, 42 percent of people have $10,000 or less saved for retirement. An estimated 55 million—or 25 percent—of Americans have no emergency savings at all.
Let’s discuss some reasons for this startling lack of financial concern, and how to reverse course.
Keeping Up with the Joneses
The United States has one of the highest standards of living in the world. Though 2013 survey data indicates that plenty of other countries are more materialistic, until America’s average household debt decreases, it’s hard to label it as anything other than consumer-driven. It’s almost an unofficial American rite of adult passage to borrow and pay back a loan of some sort. But people routinely stretch themselves too thin and end up liquid-asset poor with more depreciating, outdated things on their hands than they know what to do with.
Inability to Create—and Stick to—a Budget
Just one-third of Americans keep a detailed budget. Even fewer people set long-term savings and investment goals. Further, with all the unexpected costs of everyday life, if we don’t plan to pay ourselves each month, we probably won’t. Without tracking spending history across leisure categories, we’re oblivious to how much money we’re throwing away each month.
With no caps on essential needs spending like housing, food, transportation and healthcare, it’s hard to forecast what’s left for our own pockets. Personal and small business financial experts like Andrew Housser recommend to set incremental savings goals one, three, five years and beyond to keep yourself on track toward an overall goal.
Crippling Debt
Financial experts will say that only certain debt is bad, but in the case of American households, there’s a lot of all types. Around 80 percent of American adults have debt. Between “good” debt like mortgages and student loans, and “bad” debt such as credit cards, auto loans and medical bills, being in the red is a significant reason why so many Americans can’t save money.
Lack of Financial Education
Bafflingly, financial education courses aren’t prerequisites in high school curriculums. When we’re young, and in charge of our money for the first time, we’re liable to make the mistakes on our own if we’re not taught prudent financial habits from our parents. Between running up credit card debt on unnecessary purchases and failing to understand how debt continues to build on high-interest monthly rates, we can set our future selves’ back years, even decades, with a few poor financial decisions made in youth.
Tough Economic Circumstances
Contrary to the popular saying, you need to give people bootstraps if you want them to pick themselves up. Around half of all U.S. households live paycheck to paycheck, per CNBC. While a sizable chunk of these households probably suffers from other reasons mentioned above, the growing income inequality in this country means a lot of American people are doing everything they can to make ends meet.
Accounting for housing as 30 percent of a person’s budget, a full-time minimum wage worker in the U.S. can afford to rent a one-bedroom home in only 12 U.S. counties. For people unable to find breathing room in their budget, taking free online courses in a field such as graphic design or coding could eventually help forge a new, higher-income path.
It’s easy to be a defeatist and admit you’re bad at saving money, but this is ultimately a harder way to live. Analyze your spending and saving history, your lifestyle and how all these factors do or don’t contribute to your overall satisfaction. Once you’ve aligned your spending with the lifestyle that you want to have in the short- and long-term, you’ll experience less friction when trying to save money while feeling more empowered through the process.