The Number One Reason Most People Are Broke Or Have No Emergency Fund

June 14, 2021 by Todd Kunsman

I’m sure if you are reading this, you’ve come across other articles that talk about the importance of building your savings or having some sort of an emergency fund.  Whether that be for an unexpected medical bill, something breaks down in your car, etc.  I’m not personally a fan of the “emergency fund” term, as you should be building up your savings to use for investments, retirement, etc. But whatever it may be, most Americans are in pretty bad shape if some expensive issue comes up.

Because of a lack of prep, many times people are forced to rack up credit card debt to pay for the expense or get tons of late notices with extra fees thus essentially getting stuck with more and more bills, costing you a chance to stack that money away.

Yet, what’s even scarier is the lack of savings the groups of 35 and under have saved. Whether that is for an emergency fund or retirement.

In a Business Insider article, they broke down savings rates by different categories by using data from the Federal Reserve’s Survey of Consumer Finances.

First, average savings account balance by age, which was not looking too pretty:

Average savings account balance by age

Another section they broke down, was the median savings account balance by income:

median savings account balance by income

Understandably, higher earners are able to save more money and the older people get, the more money they will have because of time being on their side.

It also makes sense for the 35 and under group to have low savings for a few reasons: Paying off student loans, just developing their careers, maybe still going to school, etc.

Of course all the above can attribute to other things, these are just some examples.

But, we also know people with low incomes have amassed huge retirement or savings fortunes, so a lack of income is not necessarily the main cause.

So, why do people seem to have no money or struggle to save?

Before I dive in, I know it can be tough out there. Stagnant wages, climbing student debt, job loss, etc. Everyone has a unique situation, but many also would be better financially off if they did this one thing. Do you know what it is?

To continue reading, please go to the original article here:

https://investedwallet.com/number-one-reason-most-people-are-broke/