by Darrin Schenck

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by Darrin Schenck

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I hear people frequently say “I don’t have the money for that” whatever their version of “that” is.  For many Americans, they live paycheck to paycheck and have no savings in reserve.  According to the website fool.com, the average American has $4,500 in savings.  That may sound like a lot, or a little, depending on your own personal financial situation.  But let’s break it down a little further and see the reality of this.

  • 78% of Americans have a savings account
  • 51% of Americans have $5,000 or less in savings
  • 35% have $1,000 or less

These numbers are frightening when you think about how often there is a need for money for an unexpected event.  Simple things like a tire getting a nail in the sidewall will cost you a coupe of hundred bucks.  According to the stats above, 35% of people may not have enough money to cover that alone.  But it can be much worse, your engine needs work, and now your talking about several hundreds if not a couple of thousand dollars to deal with this.  If you drive to work, you need a car, period.  If you drive FOR work, you have zero choice to but get that fixed ASAP.  I drove for Lyft for a summer, and I couldn’t believe how many people I drove to minimum wage jobs for a $15-20 fee.  The app sets the price, and when there is high demand, a short ride can still cost a lot of money comparatively speaking.  If you work a ten hours shift for $7.25 an hour plus tips, a $2o ride to and from work is half of your day’s pay just to get there and back.

And yet I would see some of these people with a drink from Starbucks or Dutch Bros in their hand when they got into my car.  Some would have new NIKE or Yeezy shoes on, despite having literally no money to their name.  They were more concerned about the drip than the consequences of a monetary emergency.  They couldn’t put aside one thousand dollars just as a safety net, valuing today’s look over tomorrow’s wellbeing.  Most were not carrying lunch with them, assumingly because that isn’t cool either.  Some may have gotten to eat at work for a sizable discount, but others not.

And there you have the recipe for wasting $5,000 a year…  A six dollar Dutch Bros coffee and lunch is easily about $15.00 total.  If you multiply this by five days a week and you have consumed $5,000 in food with no return on this investment.  It is the lazy way to do it, and it also may smack of too much concern for what others think about you.  This doesn’t count weekends and money spent there.  If you look at life like you are living for the weekend so you can go blow off some steam and finally do something fun, you are spending way more than the 5K, again with zero financial benefit.

But this does not just apply to the lower tier of income earners in the US.  There are plenty of people who are house poor, drive new cars every two years on a lease, and go on vacations like the money they currently make will never stop and never even be interrupted.  This is a disaster waiting to happen.  If you think it is embarrassing for you to not take the kids to Disneyland this year, wait until you have to move and get rid of one of your cars because one of the spouses lost their job and took a while to find another.  Now THAT would be embarrassing.  And I say that because you made it known through your lifestyle that you had the money to protect yourself, and you didn’t.  That, in my opinion, would be far worse of an explanation than just telling people that you decided not to spend the money on Disneyland this year.

Another thing to factor into the stats above is this: there is a small percentage of Americans that have a lot of money in their savings account, and this pulls UP the averages listed in the stats.  So in all likelihood, those stats are even worse than they appear.

I’ve been there.  I am not speaking from a position of nothing but privilege.  I started near the bottom financially and spent a a fair amount of time hovering near just above broke.  I had a bad relationship with money, and was never taught much about it other than trading time for money in a job.  I put everyday items on credit cards and I lived beyond my means.  I leased a car because I couldn’t afford to buy it.  I lived in a nicer apartment in better part of town than I should have at the time.  I took my girlfriend of those days to nicer restaurants than I could afford.  I did everything wrong in the classic sense of money management.  And because of it, I was $70,000 in debt at age 45.  Not only is this bad in and of itself, but I had guilt about bringing all of that debt into my soon to be marriage.  Luckily for me, I married someone both willing to help me dig out of this hole, as well as her teaching me how to handle the money I make more effectively.

Today, we are in a far better financial situation.  We have no debt other than our house, and our mortgage is a very modest amount.  We both make good money at our respective professions, and have opportunity to earn more through additional things.   It took a fair amount of work and sacrifice to get here, but it was well worth it. I’d do it again in a heartbeat, and I would have done it sooner if I knew what to do sooner.

I have a feeling things are going to get tough for the next year or two if not longer.  Those who are prepared and have a little bit of a financial cushion are going to fare far better than those who don’t.   I cannot stress enough that you need to get your money game on point as soon as possible.

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