Here’s another one to add to the ever-growing list of scary household saving statistics courtesy of Businessweek:
"Just 45 percent of upper-middle-class households (income from $75,000 to $99,999) saved anything in 2012, according to the Fed study. That means the other 55 percent didn’t save for a house, retirement, or education. About 16 percent spent more than they earned and went further into debt. The report highlights the consequences of these hand-to-mouth habits: Only half of these households had enough savings to finance three months of living expenses if they lost their job or couldn’t work. A $400 emergency would force about 20 percent of them into months of debt.”
Although the financial crisis was tough on many people’s finances, this isn’t necessarily an issue born out of a severe recession. This has been going on for some time now as you can see from this graph:
These aren’t lower income households. This is a large percentage of the upper middle-class that don’t save a dime.
You could point to any number of reasons for the fact that people don’t save any money, but for many it’s simply too difficult to know where to begin. No one teaches you how to manage your personal finances in school. You’re on your own.
The problem for most people is that it’s easy to find reasons to not save any money. There will always be something there to impede financial progress.
It’s almost cliché at this point to compare fitness or losing weight with personal finance principles, but the analogy works. A recent Esquire profile on Chris Pratt (of Parks & Rec and Guardians of the Galaxy fame) reminded me of how difficult it can be for people to just get started when they’re in a rut.
Here’s Pratt talking about the changes he’s seen since he went from being overweight to getting into super hero shape:
"When I was way out of shape, the idea of using whitening strips on my teeth seemed terrible. I have to do that every day? I’ll never do it. What you want is instant results when you’re out of shape. You want your teeth whitened in 45 minutes with the use of lasers.”
Substitute saving for retirement, paying off credit card debt, creating a budget or any of the personal finance basics for teeth whitening here. When it seems like there are a million different things you need to do to turn your finances around, doing the little things will seem pointless.
But it’s amazing how small successes can build on one another like compound interest once you start to see some progress from putting simple systems in place. Here’s Pratt with how his views have changed now that he’s turned things around:
"I like clothes now. I have more energy. I sleep better. My sex drive is up. Blood’s flowing. I’m less susceptible to impulse. I’m in a different mode.
But when you’re in shape, you know it’s the result of doing a little bit every day. Moments aren’t just moments. A moment might be a week or a month. So instead of Boy, I’d love to eat this hamburger right now, I’m considering a little further into the future. I’m thinking, I eat that hamburger and that’s 1,200 calories, and I’m gonna work out tomorrow and lose 800 calories. I may as well eat a salad here, still do that workout, and then I’m actually making progress.”
Generally this is how financial progress is made as well. Your entire mindset changes and instead of treading water you actively search for ways to continue making progress. And the incremental daily changes that Pratt talks about start to evolve into the correct long-term mindset that gets results.
There are no shortcuts to building a solid personal financial ecosystem. It’s about instituting systems that allow you to build wealth methodically over time. The easiest first step in the process is to automate as many financial decisions as possible. Progress doesn’t have to be impossible but it’s never going to come from a quick fix.
Photo: Ken Teegardin
Recommended for You
A statue showing a young girl holding up what appears to be a laptop - complete with USB ports - has sparked a frenzy among conspiracy theorists. ‘I am not saying that this is depicting an ancient laptop computer,’ said YouTuber StillSpeakingOut. In the gallery’s description, the object is…Rob Waugh's Yahoo Blog
Roger the buff Kangaroo is back - and it looks like he has been working out. The muscly marsupial bounced to fame last year when he was discovered at a kangaroo sanctuary in Alice Springs, a remote town in Australia’s Northern Territory. Roger, unsurprisingly, was dubbed “Kangaroo Dundee”.David Harding
It went down in the history books as one of the most outrageous feasts of the modern era - but did explorers REALLY eat mammoth in 1951?Rob Waugh's Yahoo Blog
The captured monkey, its arms tied tightly behind its back, sits crouched over in a Mumbai residential colony trying with its teeth to untie the cord bound around its ankles. It was one of three or four monkeys to have been tearing around the community in the western city's Sion area and residents…AFP
DEAR ABBY: Every December my wife virtually buries our home in Christmas decorations. It's not just the tree and stockings in the living room; she's not happy until there are Christmas towels and Christmas soap in the bathroom and another tree and knicky-knacky stuff downstairs. Not even a doorknob…Dear Abby
A simple logic puzzle can bamboozle a lot of adults - but 80% of children can solve it near-instantly, National Geographic has said. National Geographic showed off the puzzle as part of its Brain Games TV series on YouTube - and claims that 80% of under-10s got it right instantly.Rob Waugh's Yahoo Blog
With rebel forces facing the prospect of a crushing defeat by Syria's Russian-backed regime, their allies Saudi Arabia and Turkey may send in limited numbers of ground troops, analysts say. Riyadh on Thursday left open the possibility of deploying soldiers, saying it would "contribute positively"…AFP
A former Rowland Heights doctor has been sentenced to 30 years to life in prison on Friday in the deaths of three patients by over-prescribing addictive and dangerous drugs.WTVD – Raleigh/Durham
Two small planes with three people believed to be aboard collided over the ocean just outside the port of Los Angeles, prompting a massive search by dozens of boats and diversABC News
By Nobuhiro Kubo and Ju-min Park TOKYO/SEOUL (Reuters) - North Korea may launch a rocket that it says will carry an earth observation satellite as soon as Sunday, after bringing forward and shortening the time frame for the launch, the Japanese and South Korean governments said on Saturday. North…Reuters56 mins ago
WHITE PINE, Tenn. (AP) — An 11-year-old boy in Tennessee has been found guilty of murdering an 8-year-old girl after she and her sister refused to let him see their puppies.Associated Press
Two construction workers who were working down the block from the deadly crane collapse in New York on Friday morning caught the incident on cell phone video.WABC – NY
Many teachers have it real tough, and one Australian teacher has had enough. Kathy Margolis, from Brisbane in Australia, posted an open letter on Facebook Tuesday, dishing the dirt on why she decided to quit after spending almost her entire working life in the profession. The letter, which she says…Mashable
A bride was at a hair salon preparing for her wedding when a crane came crashing down half a block away.Inside Edition
Beware of the that hole in the ground.Mic
Another depressing example of victim-blaming in the wake of a domestic violence incident.UPROXX
Carnival weekend gets rolling in Rio de Janeiro on Friday, giving the city a chance to wiggle its hips and shake off worries over Zika and the economy. Like the rest of Brazil, Rio de Janeiro is struggling to respond to fears that the mosquito-transmitted Zika virus causes microcephaly, a horrific…AFP
Mercedes-Benz made the Indian debut of the S-Class Cabriolet at the 2016 Delhi Auto Expo. The convertible car is yet to be launched for the Indian market and we can expect it to go on sale by the end of this year. The carmaker describes it as the ‘most beautiful and exclusive S-Class cars of all…Carwale All About Cars - Yahoo India
SAN FRANCISCO (Reuters) - A U.S. judge on Friday granted a preliminary injunction stopping the distribution of surreptitious videos taken by anti-abortion activists who alleged Planned Parenthood staff discussed the illegal sale of aborted fetal tissue.Reuters
The Texas teenager who was derided for an "affluenza" defense for killing four people while driving drunk was transferred to an adult jail on Friday from the juvenile center where he has been held since he was deported from Mexico in late January. Ethan Couch, 18, was in custody in a single cell,…Reuters