Got $2,000 in a pinch?
Half of Americans said they'd probably be unable to come up with that kind of emergency cash in a month's time.
Roughly 28% of Americans said they would be unable to come up with $2,000 in a month's time if they needed it, while another 22% said they would probably be unable to do so during that time period, according to a new report from the National Bureau of Economic Research. Just one quarter of those surveyed expressed complete confidence that they could get that much money if necessary. Post continues after video.
While the $2,000 figure seems arbitrary, the researchers picked it as a ballpark figure that the average consumer might incur for an unexpected expense, whether it be a hospital bill or the cost of fixing up a car. Indeed, for many families, the amount one should have stowed away in emergency funds is far greater, as experts recommend having five to six months' worth of living expenses set aside.
But, according to NBER, the fact that so many Americans would be unable to conjure up even $2,000 shows just how precarious the financial situation is for many households.
"If we consider the respondents who report being 'certain' or 'probably not' able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile," the researchers write.
So, what would these families do if they faced a situation where they absolutely needed the money?
According to the report, consumers are most likely to tap into their savings for funds, but if that proves to be inadequate, their next options are asking for help from friends and family, taking out more credit or working extra hours. About a fifth of Americans would even go so far as to sell off their possessions or, worse, take out a payday loan in order to come up with the money.
To avoid winding up in this situation, one should be proactive in building up an emergency fund by getting into the habit of putting aside money from every paycheck. As MainStreet has reported before, talk to your bank about setting up an automatic deduction from your paycheck so that you can put money away every few weeks, whether you remember to do it or not.
More on MainStreet and MSN Money:
The root of the problem is right in front of us. What do you spend in a year on phones? Right, at least two grand. And your computer and dsl? Uh-huh. These are expenses that didn't exist just twenty years ago. Paying to watch tv was a new idea just 30 years ago. Etc. When I was a kid (walking to school, barefoot in the snow, uphill both ways), My parents paid a mortgage, an electric bill, and bought food and gas. You got clothes for school and at christmas. People only drove when and where they had to. Central heat and air? yeah, we had heard of it. Etc.
It is a different world now, but it is lifestyle choices that we make. NO ONE that can post to this article can claim hardship. If it was really that tough, you'd cancel your internet, cable, etc. We CHOOSE to spend the money we make instead of save it. It's how we (Americans) want to live. Then we are upset because we took on more than we could afford? Lord help! If you want to spend more money than you have, without any consequences, get elected and move to washington!
I barely graduated high school, quit college two years in,...started off in my family business netting 16 to 18 grand a year, now im netting 38 to 42.....I have managed to save almost 100k in almost 12 years...have a mortgage thats 12 years old, that will be paid for in 4 years. Its called doing without people!!...NOt keepin up with the joneses....the latest technology, driving 5 grand cars till they have 200k....so ur not a interest slave to banks....no 8 grand vacations every year,....ect ect ect......its called disapline. If you want to retire, and not work till ur 70,.,..its what you must do in today age....its just the plain and simple, my friends call me cheap...but guess what, in about 20 years they will still be paying off there oversize mortages and I'll be sitting on a beach somewhere..............live below your means america! not 150% above..
People will always have money for what they want to have money for. How many have no cell phone, usually 2 nice cars and always eating out? That is my big one. On any given day there is a wait at Olive Garden, Applebee's even IHOP. Two of us eating out with a soda each, are hard pressed to get out of any establishment for less than $ 30 bucks. Now take a family, times a few times a week, and that will spell disaster for any budget.
Harping on those that have a little more is pointless. You would not want their tax bill either.
As a nation overall, we need to get back to basics and cut out the nonsense and live without it. evaluate what you really need. It will blow your mind, all the junk we don't need.
I've given up on recovering from this as I don't think it will happen for my generation. The Government doesn't have the common sense or ability to put aside their wants and needs in order to do what the country needs done. When this country was formed and the Constitution was written Politics was not seen as a way to get rich, it was seen as doing one's duty and working to better things for your fellow man. The Government, particularly Congress and the Senate have lost sight of this. Congress and the Senate give themselves pay raises and uncalled for benefit packages and at the same time cut or freeze pay for others. They no longer care about what is good for the country as long as they get what they want to make themselves richer. Both parties are to blame and have been for the last 50 +Years. They say what they need to to get elected and no one checks up on them to see what they actually did before voting for them again. Stop being lemmings folks and start looking at voting records and actual actions of these incumbents.
Before we get to a point where Americans are going to be able to save for Emergencies, we are going to have to clean house and bring that figure down to something a lot more reasonable because $2000 isn't enough in the US Today. I doubt if even $20,000 would be enough.
"You know, I'm one of those that can't come up with $2000 in a month. Right now, I work full time, my wife is pregnant with our first child."
Hello!! You can't come up with $2,000, but you're starting a family?!! If you don't have savings in the bank, health insurance, disability insurance and life insurance you are putting your family, including an innocent child, at risk. Bringing a child into the world without the financial means to protect that child from the inevitable problems of life is irresponsible.
That degree of financial ignorance in this country is startling.
Quit all of this class warfare. Quite blaming the rich. We all have thee ability to succeed and it's not some guy in Washington that going to give it to you ... it's you.
I think it's time for schools to teach kids a financial map to the real world. Math knowledge is not the same thing as knowing how to manage your finances. A lot of things have changed in the last 20 years and yet the school system is not revising the curriculum. All high school graduates are going to the real world not knowing a thing about budgeting their financials and how much they can spend based on their income.
It is tough out there right now, but is it is tougher when you don't have some money set aside for an emergency. Start by saving $10 a week and eventually you will get there.
Have a garage sale, brown bag it for lunch and maybe even work an extra job - I made $1000 umpiring for the local parks and rec department.
Hang in there and don't give up!
Im sorry for the people that have had colossal health issues, ect....I wasnt talking about people like this.....im talking about healthy, american families, that there kids must drive 40k suvs to high school....wear the $100+ latest shoes, have a cell with every app know to man at hundred of dollars per month cost....ect ......these are the people that need to wake up....I do not feel sorry for these people when there over budgeted world comes crashing down when the get hurt, or laid off...lose there job......life is cruel.....**** happens.....dont be a downer..but u have to be realistic about life and what it can serve you!....save....think ahead.....its basically common sense here.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Some workers lose up to a quarter of their paychecks paying off old debt from credit cards, medical bills and student loans, as well as child support.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'