Could you come up with $2,000 next month if there was an emergency?
This latest article on the average American’s inability to save money and establish at least some level of financial security for themselves and their families saddens me.
Here is the link if you want to read it (it’s pretty short): http://money.cnn.com/2016/12/07/news/economy/americans-emergency-money-economy/index.html
This article hits me in the gut on so many levels:
- We are a nation of spenders. There is a reason we are called “Consumers” by our government. Our ability to spend and “consume” is what drives our very nation. Unfortunately when we unknowingly follow this path too far, we place our own personal finances in a dangerous position.
- Financial literacy is scarce. Every day I am teaching people that the lack of fiscal literacy is a key “blind spot” in people’s lives, keeping them from achieving the financial future they hope for. Unfortunately, families are not being taught essential money management skills, so they are never empowered to make smarter money decisions going forward.
- “If it’s to be, it’s up to me”. This is a philosophy I live by, and believe more people should as well. If you want a better, safer, more secure financial future, it’s all possible…but it’s up to you. It may not always be easy, but is definitely very simple. Spend less and save more. Educate yourself on personal finance.
“It’s not a lack of income. The problem is what happens to your money when it touches your hands.”
I used to give classes to my clients on this stuff, and I loved creating new thought that led to new, better habits. One of the coolest exercises I had my attendees do before coming to our first class was to learn what their LIFETIME INCOME was. (You can do this at SSA.gov) Most were astonished at how much money they had actually earned throughout their lifetime. The next exercise was to complete a Net Worth worksheet. This essentially showed people, out of everything they’d been earning since a teenager, what they had to show for it. You can imagine this new level of clarity was like a right hook to the jaw. It became instantly clear to everyone that the problem was NOT a lack of income. The problem was what they did with the net income once it reached their bank account.
So what is the solution? Where do people start if they want to make a change for the better and begin building a better financial future? I am not naïve enough to think millions of people will change their poor money habits. But some will. Someone will become so utterly disgusted with the empty savings accounts and the constant fear of not having enough money, and they will commit to change.
The first step in a bigger, better financial future is committing to it. If you are not committed, nothing else will really matter. I will leave you with that thought, and encourage you to really think about how important financial security is to you moving forward.
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For nearly two decades now, I have seen too many homeowners paying extra toward their mortgage without first having sufficient cash in the bank to weather unforeseen financial problems or while carrying other high-interest consumer debt. The hard truth for many is this: most homeowners should be using their extra money for other purposes before sending in those additional dollars to pay down their mortgage balance.
