The economy is in its boom period – rising wages and growing employment – but the average American still isn’t saving, and this could spell doom when the next recession hits the U.S.
According to an annual Bankrate.com report, the number of consumers who reported to not having any emergency savings slipped to 23 percent, the highest level in seven years.
The website also found that Americans who had savings but not enough to cover three months’ worth of expenses climbed to 22 percent, while the number of people who had between three and five months’ worth of savings edged up to 18 percent.
Unfortunately, only a little more than one-quarter (29 percent) of Americans have enough savings to cover them for six months, down from 31 percent last year.
“People are not making headway in savings, largely in part because they don’t prioritize saving,” said Greg McBride, chief financial analyst at Bankrate.com, in a statement.
“In some cases, it’s just denial. They’ve never been out of work, had a big medical expense or experienced a significant event that threatened their emergency savings.”
How true is that? Nearly two-thirds (62 percent) of respondents said they’re not worried about their financial situation.
This isn’t a generational thing either. Baby Boomers and millennials are both bad at saving.
More debt, fewer savings, and more spending. This is a recipe for disaster.
Many boomers are retired now, are on fixed income and may not be able to save or may not need an emergency fund.
I have SS and a military pension with monthly income of $2,961.
My monthly bills are $1,200 and that includes $400 for food.
I live in a low cost of living city of 60,000. I am using all extra money to pay off high interest credit card debt, that I ran up over the last 14 years before retirement, my mistake, and I will be debt free in August 2019. Then I will be investing, not saving for emergencies.
I am 62, retired and have never had more than $1,000 in any savings account. I guess I have been lucky, I have never had any emergency that I could not borrow enough to pay for it.
Car repairs, appliance failures, but nothing real big.
I came home from vacation last year and my refrigerator compressor had failed. I went to Lowes and purchased a new refrigerator, interest free for 12 months, it will be paid off in Sept.
I have always been able to keep a job and managed my finances like I am going to lose my job.
Never paid more than $9,000 for a new car and have only purchased used cars since 1985, many for cash after saving for a couple of years.
I learned to repair cars from my father who was a mechanic / auto body repairman. I have only spent about $2,000 in 42 years having others work on my cars.
I try to fix everything that breaks around the house, and have never had to call a repairman. If I cannot fix it, time to replace it. Installed a new fan motor in my furnace, saved $400. Installed a new water heater with my brothers help, saved $700. Replaced all my water lines and shutoffs for $700 and saved $1,500. Installed a new ignitor in my gas range oven saved $200.
The problem today is most people do not have the skill set to do anything but their job. So, I guess they need an emergency fund.