File this under bad news for the average American household: The majority of people in this country don’t have enough money saved up to deal with seemingly simple to pay for financial emergencies! Yes, most folks out there would have to seriously scramble if they had to suddenly pay for a car repair or medical bill that might cost anywhere from $500 to $1,000. This tidbit of information seems to indicate that most folks are living from one paycheck to the next, with very little financial wiggle room. An illness or car problem could prevent these people from having enough money to pay their monthly bills. A recent study found that only a little over 20 percent of people believe that they be able to deal with a financial emergency by cutting down on other expenditures.
An additional 15 percent of those surveyed said that they would have to get through a temporary financial setback by borrowing money from family members. Another 15 percent said that they would be forced to use their credit cards to get by. These statistics line up pretty well with findings from other studies done in recent years. The bottom line is that many Americans are in a financially difficult spot. Even though consumer confidence stats seem to show that consumers are feeling positive about the job situation in this country, the majority are still not putting money away regularly to deal with financial problems down the road.
A 2015 study conducted by the Federal Reserve used data that studied the financial health of U.S. households. It concluded that only about half of Americans regularly put money into a separate savings account for the future. Back in 2012, the repercussions of the Great Depression were still being felt by many people, and the savings rate in the country got all the way up to 11 percent. It fell again to 4.6 percent by the summer of the following year and hit 5.5 percent by the time winter rolled around. Before the 2008 financial recession most Americans seemed to feel financially stable. Back then, the savings rate reached a dismal rate of only 1.5 percent. This was during a time when people were using the equity in their homes like ATMs. This winded up getting a lot of people in trouble when their home values began to take a hit.
In the post-recession world, consumers have been trying to rebuild their financial futures. Millions of people lost jobs and found that access to loans and credit cards were difficult to come by. As the pressure started to die down a bit, these consumers have started to spend money more freely. According to the Federal Reserve, in 2014 just 47 percent of households in the country indicated that they were saving money for emergency expense. And if those folks were likely to experience a financial windfall, of say an extra thousand dollars, they would have been more likely to spend it than to save it.
Whether the next financial crash comes in just a few months or far in the future, Americans need to get educated and prepared to deal with financial problems. It doesn’t take a worldwide market crash to cause financial chaos in your home. For most Americans, simply dealing with life’s little financial emergencies may be enough to cause serious problems. Make saving money a habit. Pay into your savings before you do any spending, and you can make sure that you are at least financially prepared enough to deal with the most common types of money problems that always seem to arise at the worst possible times.