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With the high costs of everything I think low savers are much smarter. $500 or $20,000 in a saving account it does not really make any difference in a real emergency. An average person must rely on bankruptcy courts for his emergency needs. They cannot haul away that dinner you ate a month ago but they surely can grab your savings, home, car, everything. So in the case of a real emergency many savers feel like crap losing all their hard earned money just to go through the same bankruptcy system non savers go through.
My emergency savings has helped me out. This past year was a prime example. I had a terrible fall and broke my arm. It was a very bad break and I needed surgery. Sure medical insurance paid for some of the bills, but not all. I came out of pocket about $3,000. Having emergency money helped me pay those bills.
I have a separate car savings account. The engine in my current car could blow up and I could easily replace it for cash at this point. That gives me a feeling of security.
I had about $5K saved for an emergency. However when you own an older house (48 years old), there is always some emergency.
Right now I have $100 in my savings :-( but I will be putting 10% of my income back in there for future house emergencies. Fortunately my car is a 2017 lease so I don't have to worry about that breaking down.
The average person eats 18.2 meals outside the home each month. The average meal outside the home is $12.75. That's $232.50. In other words, people spend their money on what they want, not what they need. Stop smoking and cut your mobile & cable bills in half, as well as eat out half as often, then you've just saved more than $3,500 a year right off the top.
I have savings but I have never understood this thinking. A cell phone is absolutely necessary for most people and even though you can get a $50 plan saving $50 a month seems not that much. Also eating out means you don't have to buy food for your home and buying for your home means some of it might go bad. In your scenario people really only save about $1500 or so. And your life really sucks.
I can see the argument that you shouldn't save -- it is sad that most people don't see it. But if you keep 50K around without getting enough interest to keep up with inflation you are losing money on it. I keep savings for emergency but only if I get sufficient return on my investment -- over 4%. I am currently having this argument with my condo board that has 100K in reserves just sitting around without any significant interest but then keeps putting out assessments to keep the reserve levels high.
Where i think people overspend is buying outrageously overpriced homes. It is harder but find a place to live that doesn't cost more than 1500 per month.
I'm not going to quote the sources, because we've all seen the articles in passing, but it's scary to think that something like 60% of American's practically have nothing at all in savings. I would bet that even fewer have money invested that they can one day live off of. I'm really worried that when the next "great recession" arrives things could get really ugly. It's scary to think that if you have as little as $500 stashed away in a savings account that you are probably doing better than half your peers.
Millions of Americans were too busy and too broke funding their landlords' retirement plans to fund their own.
I'm not going to quote the sources, because we've all seen the articles in passing, but it's scary to think that something like 60% of American's practically have nothing at all in savings. I would bet that even fewer have money invested that they can one day live off of. I'm really worried that when the next "great recession" arrives things could get really ugly. It's scary to think that if you have as little as $500 stashed away in a savings account that you are probably doing better than half your peers.
Sure, and I know lots of people with no savings at all. It's interesting that with all the criticism of stay at home moms, most of the ones I know (like myself) save tons of money and have no debt. I'm not worried at all, and my home is almost paid off. Yet, many people in two-income families live paycheck to paycheck, have credit card debt, car payments and blow all kinds of money ordering "stuff" from amazon.
So I'm always a bit skeptical of these articles, it reminds me of the reports you always see that say Americans need a million dollars in order to retire. Yet I know hundreds of folks who retire with far less and yet manage to live pretty decent middle class lives. are they living la vida loca, jetting off to a Greek Island? no. are they able to take a cruise with their kids and grandkids? yes.
I admit that I have a small circle of friends and family and I can count on one hand the ones I know their financial situation. I love the stories of people who know their "neighbors" situations....
Anyhoo, most of the folks i know including my kids have some type of savings. yes my kids have a car note, no they aren't driving BMW's. My big sis is a retired NYC cop, she started her second career as an interior designer so she has a 5000 sq foot home with no kids. I'm willing to bet everyone who looks at her would swear she's heavily in debt and living paycheck to paycheck.
Millions of Americans were too busy and too broke funding their landlords' retirement plans to fund their own.
As soon as I read this post I knew exactly who posted it without even looking at the name. When I did look I was right. You really hate landlords and rich people don't you?
I think the reasons for each person or family not having savings varies with each person or family. For us there are a lot of things hampering savings we currently have two kids in college, on about to start and one who did not go to college who is trying to get started and needs financial help from time to time. Car insurance is a killer. Utilities can run $1000/month during peak hot and cold months. Medical costs between premiums and deductibles are crazy expensive. Dental and vision which have almost no coverage. Property tax requires a near miracle each year to pay on time. We have considerable debt at absurd interest rates we are trying to pay down. Our cars are both getting long in the tooth. We need to start saving up for replacements, but then we also need to keep the ones we have operational.
Our mortgage is not really that high and we have a pretty decent income, but it basically all evaporates before the next check comes. If we do get any money, there are already things piling up car repairs (it would be good to have heat), house repairs, my wife would really like to go visit her parents and siblings in Texas. . .
We have some money in the 401K and can borrow from that in a pinch. How woudl we ride out a recession? Nothing really changes. Both of our salaries are fixed. if either of us lost our job, we could find something else rather quickly even in a recession.
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