Thursday, June 2, 2011

A Self-Rightous Post on Saving Money

Last month I read a post on the WSJ's Real Time Economic blog that explained that half of American households are "financial fragile" which it defined as these households' impossibility or improbability of coming up with $2,000 in 30 days.

It was shocking to me.

$2,000 is a lot of money. No question about it. It would require saving just about $167 per month for a year and not touching it to have on hand. But that is for one person. So in an average family with an average of two incomes that is $84 per person per month. This also takes into account no other savings or value available to the household.

So while it is a lot of money, I don't think it is an impossible amount to have on hand within a month.

Now, I get it. I am privileged, well-off and have a great job. All things that are not afforded to everyone. This is especially true with unemployment hovering around 9.5%. But this goes more to societal mind set than anything else.

My explanation assumes people actually save money. I was taught to pay yourself (Feed the Pig, so to speak) before you pay anyone else. As we hear in the blow clip from CNBC, people should view savings as an expense and not a luxury.

Societal Issue One: We spend more than we save. Just look at the average household's credit card debt ($14,743 for those not interested in looking it up). Now compare that to the number of households that are "financially fragile."

Credit Cards shouldn't be used to buy things you can't afford. They should be used to bridge the gap between dinner check and pay check. It is shocking to me that people go into debt for vacations or iPads or bar tabs. It is horrible that people go into debt for healthcare expenses (for another post) or to fix a car. But the frivolous spending in the face of insufficient savings is a problem, and it will, in the end, hurt consumer facing businesses that depend on said frivolous spending. (I have nothing to back that up but it sounds really good.)

This is clearly a simplified view of the situation but there is no excuse for buying a $100 worth of drinks at a club when your weekly pre-tax income is about $400.*

Societal Issue Two: But not everyone is frivolous. There are countless families that truly are working hard while just getting by. This is an expensive country and ours is an extremely expensive city. In the past, we had societal safety nets that would and could help people bridge the gap from where savings was in fact a luxury to where it is just another expense.

But these programs are all under attack by right-wing politicos. The measures insured that our seniors had health coverage and the most vulnerable among us could feed their children. The crown jewel was (and still is, for a while) Social Security payments.

However, thanks to boomers and Republicans, my generation will never see a dime from Uncle Sam after we "graduate" from the work force. We need to save not for the retirement of our dreams but to pay for our room and board after we stop getting a regular pay check.

Main Message: We need to take responsibility. This isn't something you hear much from liberals, but no one else is going to help you if you can't help yourself. Credit Card companies are interested in your money. The government will most likely be unable (or unwilling thanks to "boot strap pulling" ignoramus destroying our social societies) to do anything to support its citizens.

So, if you find yourself in the financially fragile group, start by saving all your change and putting it into a jar and taking that jar to the bank and rolling those coins and putting that into a savings account. Hopefully you can find one with really low fees and this will be a start. It will be the beginning of a personal safety net. It might not be much but it is something. Societal change is tough but personal change can be done, and we are each responsible for ourselves.

If you fall into fragile group and are hitting up the club every weekend, stop it. You are being stupid and will cost me later in life (I do have back up for this in addition to it sounding good). So cut this -- and what I am sure are countless other fiscal cancers -- out of your life. Put half of what you spend on booze and other stupid shit into a savings vehicle of your choice. You can use the other half to get your party on; I hate the game not the playah folks.

Got it? Good.

The end.

And now back to your regularly scheduled programming of snarky and self-deprecating blog postings.
*This assumes full-time employment at $10 an hour.

No comments: