Cashed Out: Why Most Don’t Have Emergency Fund

The numbers don’t lie. They just make you feel worse about your current financial situation.

If you haven’t heard, you don’t have any money saved. Yes, you, the one who works hard, has a good job and yet if something happened outside of that two-week window you’re paid within that is going to cost money, you’d be in some serious financial trouble because you don’t have anything saved.

No emergency fund. No coffee cans buried in the backyard.

Nothing.

But you’re not alone, as about 50 percent of the population has less than a thousand dollars saved, while a whopping 70 percent has next to nothing. A recent poll conducted by CNN shows that if you had to come up with $2,000 by next month that half of the people being asked wouldn’t be able to deliver on cue.

Not good. But, also not impossible to fix.

What is the biggest reason we don’t have cash on hand, money saved for that rainy day or the “what ifs” of the world?

The truth centers on budgeting and living well beyond your means. Having money is about living on your expenses alone and not wishing for what the neighbors just bought or being subdued and seduced by television commercials and flashy ads trying to get you to spend money you may not have.

If you make $2,000 per month (take home), then you should be able to afford a house, car, rent, utilities, and bills that come in about $1,800 tops, leaving you with some disposable income that belongs in your savings account.

The general rule of thumb is you should be banking about 10 percent of your total income every month so that $2,000 means you’re at about $200 at minimum.

That $200 means you have more than $2,000 saved by the end of the year and $20,000 after ten years. And while that time frame might seem like forever from now, you can’t overlook that amount of money and what it would mean to you as you get older and continue to work to save better and smarter.

Savings accounts can’t be pieced together if you’re constantly spending money that you don’t have. Furthermore, if you have to buy clothing or have other expenses that aren’t major ones, make sure you account for them. Nothing is quite as frustrating as assuming you’ll have $500 left at the end of the month and end up a few hundred dollars in the red.

To truly save money is to understand the simple expenses versus income subtraction and how you can always use that ten times out of ten to save money properly.

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