For nearly half of Americans in the workforce, financial disaster would occur from missing just one paycheck. As people continue to live above their means, if the worst happens and they lose their job, many would fall back on dangerous options to make ends meet instead of cutting back their lifestyle.
According to Market Watch, a new study from NORC at the University of Chicago, an independent social research institution, found that 51% of working adults in the United States would need to access savings to cover necessities if they missed more than one paycheck. And this is especially detrimental because not all Americans even have a savings account. Previous research from the Federal Reserve found that 4 in 10 Americans couldn’t afford a $400 emergency, and 22% say they expect to forgo payments on some of their bills. The savings rate in the U.S. fell to 6.5% in March from a recent high of 8.8% in 2012.
Almost half (47%) of Americans said that they would rely on credit cards, or take a loan from family or friends if they missed a paycheck. And nearly a fifth of consumers would rely on a payday, auto, or another short-term loan. These loans, which can carry interest rates upwards of 600%, can easily trap borrowers in an inescapable debt cycle as they struggle to pay back just the interest.
A similar 2016 GOBankingRates survey found that 69 percent of Americans had less than $1,000 in total savings and 34 percent had no savings at all. That means many Americans would have to put an emergency expense on a credit card or borrow money another way just to cover the cost of a $1000 expense. –SHTFPlan
About two-thirds of Americans who make less than $30,000 annually would be in a position of financial hardship if they missed a paycheck. “Even so, notable differences remain across race, ethnicity, education groups, and locations and many individuals still struggle to repay college loans, handle small emergency expenses, and manage retirement savings,” the new study added.
The researchers interviewed a nationally representative panel of 1,000 people. Those conducting the study surveyed those individuals and said the study was designed to be indicative of the U.S. population. The survey provides a sobering look at Americans’ precarious finances. Even as the mainstream media blasts us with news of the booming and improving economy with plentiful jobs. The stock market has also generally continued its upward trajectory this year, putting some financial analysts in a tough spot. Is the economy good or not? Main street Americans appear to be in a bind.
Prosperity Now, a Washington, D.C.-based think tank focused on expanding economic opportunity for low-income Americans, said 40% of U.S. households lack a basic level of savings.
These “liquid asset poor” households don’t even have enough savings to live at the poverty level for three months if their income was interrupted.
“The 2019 Prosperity Now Scorecard shows that too many families are either struggling to make ends meet, or are just one emergency away from a financial disaster,” it said. –Market Watch
“Short disruptions in pay can cause significant hardship, as most Americans appear to be living paycheck-to-paycheck,” Angela Fontes, director of the Behavioral and Economic Analysis and Decision-Making (BEAD) program at NORC at the University of Chicago, said in the report
Preparing for a financial downturn (be it personal like a job loss, or a financial recession) is easy, yet difficult at the same time. Save enough to have 3-6 months worth of expenses on hand at all times. You should also consider paying down any debts that are taking a large chunk of your income away. These are easy solutions, but admittedly, very difficult to achieve, especially considering 78% of Americans are living paycheck to paycheck.
Dave Ramsey’s book The Total Money Makeover is a great resource for those looking to add a little financial security to their lives.
Having replaced the company store and payment in script with far more stealthy methods of offshoring manufacturing and importing cheap labor along with easy credit, the goal of an utterly compliant workforce is achieved.
kevin, I’ve mentioned before, I’ve been self-employed most of my career life. It goes deeper than just the facts you mention. I can’t count how many times I’ve talked with some young guy who is darned good at his trade and say to him, “you could make it on your own!!…you should think about starting your own business”. And the rabid fear they exhibit is truly scary as all. The concept of being their own boss, the taught since childhood uncertainty of going it alone…. that compliant workforce you mention is more than that. It lives in fear due to what they’ve been inculcated to believe about themselves. I joke with them and tell them “hell, I wake up many a day unemployed and I have to get ‘out there’ and drum up the work”. Which is quite true. Does it worry me? No. Just a matter of confidence and belief in myself I guess. That is what we need to turn this around. To teach our kids that they just need to believe that they can do it…. really can, without the parachute of some company framework over their heads. My last joke, which is also true, is that I’m the hardest boss I’ve ever worked for. That I quit my job at least once a week and before that day’s out, I’m begging that guy in the mirror for one more chance.
All the constant negativity and being told that the sky is falling any day now has caused a lot of people to become overly paranoid and desensitized to the point they just don’t care anymore.
If all you are hearing is negativity and being told that SHTF is any day now,you are going to get to the point that anything you do is
Value adding manufacturing in the absence of harvesting resources (food, mining) brings the money to an area. My world fed directly and indirectly from DuPont, Mobil Oil, Texaco, BP, Hercules, Monsanto and Shell along with a few others. The self employed, butcher, baker and candlestick maker were in the food chain but in a periphery position. The focus in previous administrations was, “small business”. America was made great with big. Self employment while often great for an individual but an economy functioning from it is in essence a cottage industry. Granted there are exceptions as Bill Gates and Steve Jobs show.
I enjoyed your post as much as the article! Especially the part about you quitting every week as you look for the next opportunity:) As a small biz owner I can really relate to that statement. I’ve never been happier, but as the yearly expenses go up every year, I find myself rethinking what I am doing more and more. Owning your own business means all the success and all the failure is yours to own. Nobody to blame but yourself and many people don’t have the right mindset/personality to take that on. At the end of the day, it’s a one man sport and everything good and bad falls squarely on your shoulders. When my husband was out of work for four months, we didn’t sweat it in the terms of “sell everything now” mentality…We have saved, prepped and maintain zero debt other than the house, so he was able to concentrate on finding the right job instead of any job. We had faith it would all work out in the end and it did. Good luck on your continued success and thanks for the post.
“For nearly half of Americans in the workforce, financial disaster would occur from missing just one paycheck.”
yes, but this is 50% of the WORKING americans……which is only 62% of the population…….add that number to the 38% of working-age americans that DON’T WORK, and you have a disaster looming, dead-ahead…. it’s much worse than the author states…..but their paychecks could never stop coming…………………………………right?…..RIGHT?
buttcrackofdoom… all it takes is one missed EBT payment to the 38% not working and you have got pandemonium! Break out the popcorn.
Whats a paycheck?
Its been so long i have no clue. Im just lucky my family takes care of me.
As long as I have money for beer all is well. 1 paycheck will buy 3 months of beer so disaster is not looming lol.
Genius must make a lot of money, 3 month of beer is what about $10K in your drinking lifestyle eh?
Oh hell no. Maybe 400 a month. so 1200 lol. Yer a funny guy….
I’ve got more work than I know what to do with, now if all this dang rain would go away I could get outside and actually get a paycheck. Rained out in central Arizona again. Low will be 38 tonight, still can’t plant the garden either. Grrrr.
Schools used to have basic economics; such as, balancing a checkbook. Because of the dumbing down of education, we are where we are.
By Ben Franklin:
1. “A penny saved is a penny earned.”
2. “Rather go to bed without dinner than to rise in debt.”
3. “Having been poor is no shame, being ashamed of it is.”
But we have to go out and spend or the turrists win. Extra large freedom fries please.
Oh sorry, 2001 called.
In all seriousness though if people start saving doesn’t monetary velocity go into the shitter and the economy (once again) dies anyway?
Get off drugs, then make better choices in the future.
How can people be expected to make good financial decisions when so many of them are popping pills.
The media promotes drug addiction and sexual license, promiscuity, and perversion. No wonder people take comfort in spending money. They have lost their moral core and feel empty. They’re a shell; trying to replace their lost culture, their lost character with non-essential superficial items of clothing, toys, and transient temporary meaningless experiences. A trip to Disneyland for the kids does not make up for a mother who chooses a career over homemaking. Where are the men? Did they trade in their balls? Get off the couch and go play ball with your sons before they grow up and look for a Dad replacement by becoming a homosexual. Men who can’t control their spending, can’t control anything else.
Well I drink 400 bux in beer every month and make great financial decisions! I do have a spending problem though… I buy too much silver. Perdy much have everything else I need so I guess I gotta invest in something huh?
If your making less than 30k and working full time you need training. people need to learn to live within a budget. When your budget doesn’t afford what you need you go without. Done it my whole life. If you can’t live without it then you need to increase your budget. Do side jobs or work overtime to cover it. You can also sell things you don’t need anymore.