Martin Crutsinger
“People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.”
According to an article by economics writer Martin Crutsinger, the average American spent every penny of disposable income they made last year and dipped into their savings from previous years…
While the exact reason for the poor savings rate is unknown, the article discussed a couple of possible causes:
“Economists have put forward various reasons to explain the current lack of savings. These range from a feeling on the part of some people that they do not need to save… to an effort by many middle-class wage earners to maintain their current lifestyles even though their wage gains have been depressed by the effects of global competition.”
Martin Crutsinger is an Associated Press Economics Writer.
Source: 2006 Personal Savings Fall to 74 Year Low by Martin Crutsinger (Associated Press)
If you have no savings, a time-sensitive financial emergency will send you looking for expensive loans such as payday loans or credit card cash advances. While these loans may offer short-term reprieve, their high costs will ultimately add to your financial burden and may put you on a debt treadmill. The best way to avoid expensive loans is to budget and create a rainy day fund. Ideally, your rainy day fund should contain enough savings to last you at least three months.
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