How to Make a Finance Fund: Guide for Financial Security

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How to Make a Finance Fund: Guide for Financial Security

Financial impotence goes by other names: financial fragility, financial insecurity, financial distress. But whatever you call it, the evidence strongly indicates that either a sizable minority or a slim majority of Americans are on thin ice financially.

Financial Security

How does the average American fare financially? Are you in debt? Most Americans are paying for the privilege of making ends meet, with an estimated 52 percent carrying at least one bill of $400 or more. The biggest item on this list is mortgage or rent. According to the Federal Reserve’s Survey of Consumer Finances for 2016, the average American family has a credit card balance of $7,400 and $14,200 in other credit-card debt, the average amount owing in student loans is $16,400, and the average amount owing in auto loans is $20,800. The average American household’s net worth is a paltry $92,700, a drop of 16 percent from the previous year, and it’s fallen 13 percent from the pre-recession peak in 2006.

The Unexpected

Faced with the high cost of housing and education, high health care and retirement costs and a dearth of good paying jobs in these sectors, we should all be frightened to think that it is this way. It is surprising to me that there is not more public attention focused on the problem. But, then again, there has not been much written about it, and it certainly is not getting more in the media. Not surprisingly, we do not know much about the size of the problem, and most people do not know much about the poor financial condition of the so-called middle class.

Why Is This Happening?

Let’s face it: The good old days, those of the 1990s and 2000s, were great times for some people. The boom was easy, there was little risk, and saving was no sweat. However, overconfidence — and the easy money — created two unfortunate consequences: A boom in home-price appreciation is what got people’s attention. But people focused on home-price appreciation without considering the long-term risk: Rising prices do not always correlate with rising wealth. The boom caused a boom in consumer debt. Many people got into debt to keep up with home-price appreciation. As housing prices began to correct, many of these debtors fell victim to their own bubble mentality. They put off paying bills or stopped going to work.

What’s the Solution?

Given how precarious most Americans’ finances are, a number of possible solutions have been proposed: Full employment. This, in theory, would produce enough income in the private sector to make up for lost government jobs. This, in theory, would produce enough income in the private sector to make up for lost government jobs. Increased taxes. Payroll taxes are already paid by employers, employees, and the government. Why shouldn’t everyone be forced to pay them? Payroll taxes are already paid by employers, employees, and the government. Why shouldn’t everyone be forced to pay them? Payment in kind: no goods and services are paid in full. Instead, the marginal cost is added to everyone’s budget, until the marginal cost of everything is met and no more is purchased.

How to Make a Finance Fund

A new study published in The National Bureau of Economic Research – the ‘highest form of academic peer review’ – takes a step toward measuring just how precarious we are. The study, by researchers at Harvard, Stanford, and the University of Pennsylvania, found that just half of us, 50.7%, can absorb a 14% drop in income without the need to reduce our spending. This means that 45.3% of us will have to cut back substantially, up from 39% in the 1990’s. Meanwhile, nearly a third of us (30%) have little more than $1,000 set aside, according to a separate report from the Centre for Financial Services Innovation. One in four American households don’t have any savings at all. Overall, nearly half of the U.S. population – 49.

Conclusion

America is the wealthiest nation on earth, but most Americans live on borrowed money and most Americans have no retirement savings. The fastest-growing portion of the U.S. labour force has no retirement savings at all, and growing numbers of middle-aged Americans are leaving Social Security behind, believing it to be nothing more than welfare. Social Security may be broken, but America has not yet made peace with the fact that Social Security is broke.

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