Pretty much all of us, according to a new survey.
Image adapted from Flickr user EU Social
Brad Tuttle over at Time Magazine's Money section points us to a new poll confirming what we already knew, Americans don't have enough savings.The National Foundation for Credit Counseling's poll (done online) showed just 36% of respondents saying they'd take $1000 out of savings if they needed it quickly. That leaves 64% of Americans doing things like borrowing from family, taking out a cash advance from their credit card, getting a loan or pawning assets in order to cover a vanishingly small amount of money.
While the numbers aren't a spot on match, this is fairly consistent with what Bankrate found back in June and what we heard from a panel of experts at our "Rebuilding the Road to Financial Security" event.
If you're not convinced by NFCC's methods I recommend reading this paper by Michael Collins, "Coming Up With Cash In a Pinch" for a better understanding of the ways that people behave when the money crunch hits.
So really it shouldn't be a surprise to the folks at Time or their readers that this is the way things are, we've known for some time. The question is what do you do about it?
Well we think the creation of the CFPB holds the potential to settle and level the market for financial products so that people are better able to build wealth, as opposed to having it stripped from them in routine (and emergency) transactions. We also think there's a lot more to be done to improve the savings landscape for low- and moderate-income Americans (really, how best do you refer to this 64% of the population? Or the 45% in the Bankrate survey? It's more than just the poorest Americans, that's for sure.) I'd start with using the tax system and code to incent greater levels of saving, as The Saver's Bonus does.
There's lots more we could do as well, but I don't want to create an emergency, then Congress might have to borrow cash from their brother, or sell the award they got at that reception last month, just to cover the gap.
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