The data on Americans’ personal savings has long pointed to a public that is doing well on paper, but ultimately unprepared to miss even a single paycheck. While the economy is doing quite well (again, on paper) at the moment, if you are an average American, you might not be experiencing the benefits associated with a healthy economy. A 2017 survey showed that 78% of American workers are living paycheck-to-paycheck, and one in four are saving nothing at all from their paychecks. The current government shutdown has highlighted this situation in a way we haven’t seen in a long time. Federal government workers are generally people we consider as middle class, and the work itself is generally stable when compared to the private sector. However, now that thousands of furloughed workers are being seen on the TV discussing how they can’t make mortgage payments and how at least one is now rationing their insulin, the issue is in the open. So, what can you do to make the best out of such an economy?
The first thing you need to keep in mind is that no matter how little it is, you should do your best to SAVE. Experts agree, failing to save is incredibly risky. 40% of Americans cannot afford an emergency $400 expense. You don’t want to be in that 40%, as no matter how hard you try to live a normal life, you will likely get hit with a nasty financial surprise at least once in your lifetime.
Secondly, take a closer look at your budget. Most Americans are overspending in at least one aspect that can be reduced. In the long run, if you are already struggling, social security won’t cover your expenses, and just because you can afford something (at the moment) doesn’t mean that you should buy it. Consider that despite the paycheck-to-paycheck situation most Americans are in today, the economy is actually doing WELL. Imagine how things would be going if the jobs market wasn’t doing so well. In fact, don’t imagine it, but PREPARE for it.
Lastly, when it comes to how much you should be saving, consider a few factors. Some people will aim to save up a sum of money equaling their salary over a period of time. Goals like these are not bad, but also keep your liquidity in mind. If your credit is not maxed out and you find yourself out of a job, your credit alongside a few month’s paychecks’ in savings will give you much needed breathing space.
