We’ve all been told a hundred times to save for a rainy day, but most of us never expected to be caught out in a storm without an umbrella. Unfortunately, with unemployment now reaching record numbers and layoffs affecting all different sectors, blue and white collar alike, millions of Americans are now at risk of getting washed away.
According to the Bureau of Economic Analysis, the personal saving rate in the United States dipped below zero in 2005 and averaged just over 0.5% in 2007. Most don’t have enough in savings to cover their living expenses, let alone pay down their accumulated debt. Defaults are on the rise as credit card payments become increasingly difficult to manage, and cities across the country are seeing the highest levels of foreclosures ever.
While we can’t undo the past, we can change our behavior to better prepare for the future. There’s a lot of wisdom to that old adage about the rainy day. The path to financial security starts with incremental steps, and even by saving a little each day you can build up your rainy day fund faster than you think. Switch your $4 latte habit to home-brewed Joe and bank an extra $1000 this year. Commute on public transit or carpool and watch your gas bills plummet. And while you’re making lunch for the kids, pack an extra one for yourself. PB&J once a week won’t hurt your waistband, or your budget.
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