Lately, the news has brought us positive reports on the state of the economy. We’ve seen gains in the stock market and housing market, and unemployment is low. Those positive headlines, however, still aren’t translating into good news on a personal level for many people.
According to a recent Bankrate report, many of us have yet to establish a “rainy day” fund for emergencies. The report first analyzed the preparedness of households overall, and then broke down those statistics into economic levels.
- 23 percent have no emergency savings at all
- 22 percent have a bit of money stashed, but not enough to cover three months’ of expenses
- 18 percent have enough money in savings to last three to five months
- 29 percent could cover at least six months of living expenses (the financial planning ideal)
- The rest are unsure of their emergency preparedness
You might believe that savings directly correlates to income, and therefore these numbers suggest that some people just don’t earn enough to stash a bit in savings. But actually, when breaking down responses by income level, the report found that a surprising 27 percent of households in the lowest income bracket had saved at least three months’ worth of expenses!
On the other hand, one in four of the highest income households have no emergency savings, or just barely enough to cover three months of expenses.
Age proved to be another surprising factor. Contrary to what you might expect, Millenials were the most likely to feel comfortable with their savings and emergency preparedness. Meanwhile, 30 percent of younger Baby Boomers aged 54 to 63 have nothing set aside for a rainy day.
Overall, what do these numbers show? People are individuals, of course, but we can spot some trends at work here. We can see that income does not always lead directly to financial responsibility, nor does age and maturity! Most likely, these numbers represent priorities. Those who want to prepare for a financial crisis make saving a top priority above other personal expenses.
If you’re ready to better prepare for your future, give us a call. We can help you analyze your budget and make recommendations for changes that may lead to improved financial stability.