Mandi Woodruff | Feb. 4, 2013
In the past few years, Americans have learned a thing or two about how quickly disaster can strike.
And with each Hurricane Sandy, housing crisis, and crash that rocks our world, we’re faced with the realization that many of us simply aren’t prepared for the worst.
A sobering new report by the Corporation for Enterprise Development shows nearly half of U.S. households (132.1 million people) don’t have enough savings to weather emergencies, or finance long-term needs like college tuition, health care and housing.
According to the Assets & Opportunity Scorecard, these people wouldn’t last three months if their income was suddenly depleted. More than 30 percent don’t even have a savings account, and another 8 percent don’t bank at all.
We’re not just talking about people who living people the poverty line, either. Plenty of the middle class have joined the ranks of the “working poor,” struggling right alongside families scraping by on food stamps and other forms of public assistance.
More than one-quarter of households earning $55,465-$90,000 annually have less than three months of savings.
And another quarter of households are considered net worth asset poor, “meaning that the few they have, such as a savings account or durable assets like a home, business or car, are overwhelmed by their debts,” the study says.
Stuck on the wheel
One of the prolonging reasons consumers have consistently struggled to make ends meet has more to do with larger economic issues than whether or not they can balance a checkbook.
Per the report, household median net worth declined by over $27,000 from its peak in 2006 to $68,948 in 2010, and at the same time, the cost of basic necessities like housing, food, and education have soared.
It’s a dichotomy that is hammered home in a new book by finance expert Helaine Olen. In “Pound Foolish: Exposing the Dark Side of the Personal Finance Industry,” Olen knocks down much of the commonly-spread advice that is sold by the industry –– most notably the idea that if you’re not making ends meet in America, you’re doing something wrong.
“The problem [is] fixed cost, the things that are difficult to “cut back” on. Housing, health care, and education cost the average family 75 percent of their discretionary income in the 2000s. The comparable figure in 1973: 50 percent,” Olen writes.