Have You Got $500 Bucks?
According to a recent article in the Chicago Tribune, most American’s would not be able to cover a $500 emergency.
While I have read that American’s are notoriously bad at saving money, I still have a hard time believing that people have no recourse for what I would consider a modest amount.
That’s about 8 days of full time work at the current Montana minimum wage.
Just How Bad Is It?
According to Bankrate.com all age groups rate poorly at being prepared for future emergencies.
Thirty five percent of 18-29 years old had no savings at all and 28 percent had less than three months of expenses in savings.
In the under 30 category, only one in 10 had six months of expenses saved.
Thirty nine percent of elderly savers, those over 65 years of age, were much more likely to have six months or more in emergency savings.
But 15 percent in that same age group had no emergency savings.
If you are a member of the lowest income household or are under 30, you are the most likely to have no emergency savings at all.
How To Correct The Situation
Lower gas prices are certainly a help to start a savings behavior. We used to buy gas here at $3.86 per gallon. Now it’s around $1.79/gal. — a difference of $2.07/gal.
Or about $30 per fill-up for a 15-gallon tank. More if you are driving a van, pickup, or SUV.
What if you saved that difference? Pay yourself in savings what the differences in gas prices are and use that money to retire debt.
Spend it by giving yourself more disposable income for the future. Your standard of living should not increase or decrease at all from when you were paying the higher price in gas.
Eat more economically. Buy groceries on sale. Clothing at thrift stores. Buy in bulk at a savings whenever possible.
Give up cigarettes and alcohol. Both are big money items. A pack a day habit will run you around $150 per month. If you can do that you can have your $500 emergency money in a little over three months. Plus you will be healthier.
Some Final Thoughts
Saving money is hard. There is no way I can sugarcoat it for you. You are going to have to do without some things you like to save your future.
When my wife and I were retiring debt, we cut everything but the bare essentials.
If it cost rather than saved, we got rid of it. We cut the cable, newspaper, used the fireplace more, we turned down the heat, and cut anything that would reduce expenses.
We didn’t have to do it forever, but after a couple of months we actually had a buck or two still there before payday. It was a great feeling.
Emergencies are going to come up. They always do. Will you be ready?
Help someone save by telling us your money saving stories in the comments below.