As I believe I have mentioned, I'm stuck with a long commute these days (and I feel guilty about the carbon footprint, believe me) so I'm ODing on NPR. Last week I heard a long story about how report by the National Bureau of Economic Research finds that nearly half of Americans say they either could not, or weren't confident that they could raise $2,000 in 30 days in case of an emergency. That means they have no meaningful savings and can't even borrow $2,000 on a credit card, and also don't think they could borrow the money from a relative or friend.
I'm ashamed to admit it, but having been gainfully employed at a decent salary for many years I just hadn't stopped to imagine what life is like for most people. The disembodied radio voices seemed equally impressed by this news. So today I had a chance to look up the original report. It's by one Annamaria Lusardi, here you go.
They also find that almost half the people say they have trouble keeping up with monthly expenses -- which more or less means the same thing, I guess, since it implies they can't save anything -- and that only half of people 45-59 years old have tried to figure out how much they need to save for retirement. Most of these people do not have any retirement accounts.
Now, this is all very depressing but perhaps even more depressing is that Lusardi essentially interprets this as meaning that Americans are financially illiterate and irresponsible. As she puts it in the abstract:
Financial capability is measured in terms of how well people make ends meet, plan ahead, choose and manage financial products, and possess the skills and knowledge to make financial decisions. The findings reported in this work paint a troubling picture of the state of financial capability in the United States. The majority of Americans do not plan for predictable events such as retirement or children’s college education. Most importantly, people do not make provisions for unexpected events and emergencies, leaving themselves and the economy exposed to shocks.
Well okay, but maybe it's because they cannot do so. Their income just isn't sufficient for them to have anything left over after they pay the rent and buy the groceries. They could take the time to bone up on finance and make all the elaborate plans you can imagine, but they don't have any money so it would be pointless. They aren't planning for their children's college education, or for retirement, because they can't afford it.
I'm planning to become the quarterback for the New England Patriots and marry Gwyneth Paltrow. That shows how smart I am.