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.
2 comments:
i think your interpretation is correct. sure, nearly everyone could make some better financial choices here and there -- but the many folks who have trouble with basic expenses every month and cannot even borrow $2000 in a dire emergency are not high rollers.
all my clients for over 25 years have been indigent. the stories of their families' struggles are absolutely heartbreaking.
the economic gap between rich and poor in this country has grown enormously, and republicans propose to make that gap worse, to remove or cripple social safety nets while lowering the burdens of the wealthy. it's appalling.
also appalling is that our current economic woes can be laid at the feet of those now bleating about fiscal responsibility. cut taxes for the wealthy; borrow our way through a couple of wars; cut financial regulation, comsumer protection, safety, worker protections; increase prisons, but cut rehabilitation; cut education and jobs programs. suddenly, this is a financial problem that can only be solved by making the least advantaged suffer even more. it is despicable.
I guess it would be too cumbersome in such a report to discuss the ramifications of outsourcing and the dearth of jobs available in this county. Or the shift of wealth to the top 1%. Or the Wall Street trading that left regular people with houses worth less than they paid for them. It seems to me I just read that 54,000 jobs were added in May. I wonder what the salary is on those jobs. Enough to make smart investments in financial instruments? Even that language irritates me.
Post a Comment