Recession still affecting Emergency Savings
Call it a lingering side effect of the recession. Research from Bankrate.com finds 76% of Americans are lacking in emergency savings and don’t have a stash of cash that could cover six months of expenses. Senior Financial Analyst Greg McBride says the recession contributed to this tendency by taking away some fixed portions of a family’s earnings like stocks or the family home. He thinks it is going to take a while to correct this paycheck-to-paycheck mentality with most Americans at square one. “The biggest barrier to not saving is not being in the habit of saving.” McBride says one way to squirrel away cash is to place a portion of each paycheck in the rainy day slush fund. “If you wait until the end of the month and try to save what is left over, to often nothing is left over, instead you have to pay yourself first.” It is very difficult for people to save during this current economic recession, says McBride. “Largely because their incomes are flat and yet their other household expenses continue to creep higher, which leaves them with very little extra cash to deploy into that emergency savings.” McBride concludes by saying that income will always determine savings. “Until we actually see a substantive increase in household income, it is going to be very difficult for people to make much headway in accumulating that needed savings cushion.” Make saving money a goal of the entire family. Teach kids the value of money and show them how to save for a rainy day.