It’s a peculiar situation to see the numbers on the economy and America’s richest one percent looking pretty good. Unfortunately, the numbers at the opposite end of the economic spectrum look dismal. It’s this tale of two economies that leads to very different views of whether America is on the right course economically.
Affordability challenges have been creeping into the middle class for years while the income of the very top earners continues to rise. Today there are eleven million Americans spending half their budget on rent. And twenty-one million Americans are spending thirty percent or more on rent. From that perspective, who would be happy about the economy?
No Safety Net
A far bigger worry should be the number of Americans without an emergency fund. Sixty-six million of your fellow Americans have a big $0 set aside for an emergency fund. Surprisingly, a full third people in the middle of the age range, thirty-six to fifty-one, said they had nothing set aside for emergency. That gives me hope for the younger generation and leaves me scratching my head about my own. Without an emergency fund, you’re counting on debt to get you through a crisis. That either means credit card debt, the most expensive of all, or borrowing from family. Those are all bad options at a time when Americans should be preparing for the next big economic disaster instead of going further in debt.
It Doesn’t Get Any Better Than This
Right now, today, this instant, you should be preparing for the next recession. The last seven years of relative prosperity are built upon a bubble of cheap government money that simply can’t last. What’s going to trigger that next downturn no one can say, but I can guarantee you it will happen. When it comes to the opportunity to gain valuable work skills, find a more stable job, start a sideline business to raise your income or pay down debt, all the complaining about the economy aside, it doesn’t get any better than this. Take time to start doing something today or you’ll regret it.
Start With An Emergency Fund
Step one is building up an emergency fund and there are some clever ways to get started that don’t feel like you’re making a big sacrifice, but only because you’re spreading that sacrifice out over a bunch of smaller transactions. The way I got started was dollar rounding. This is harder in these days of instant bank balances on your smartphone but the way it works is to round purchases up to the next even number or $5 increment. So, a $3.75 purchase means you deduct $5 from your balance. The good news is there are banks that will do the rounding for you and deposit the difference in your savings account!
Another way to get started with an emergency fund is by playing games with your budget. Pick a recurring bill, like your electric bill, and budget for the highest monthly cost throughout the year. If you live down south anywhere, that would be in the summer when you’re running the A/C a lot. Budget for the highest electric bill and take the difference during the cooler times of the year and put it toward your emergency fund.
Let’s face it, things happen and you should be prepared.