The data on how many of us have so little ability to save is alarming.
According to a recent survey by GoBankingRates in the United States, people with an income in excess of US $150,000 have trouble saving. 23 per cent had less than $1,000 set aside for unexpected emergencies. One third of that group had nothing saved for retirement.
In Canada 41 per cent of working people spend all or more of their take-home pay. Many go into debt. This information is from a Canadian Payroll Association study completed in 2017.
This lack of saving in modern day society is a ticking time bomb. A day of reckoning will come.
To put the lack of saving in proper perspective let’s consider the financial characteristics of the three stages of life.
The early years are often concluded with post-secondary education. Many graduate with student debt.
During your working years is the time to earn an income which can eliminate student debt and save for retirement. Retirement comes after employment income stops so accumulated savings are necessary to augment any workplace pension and/or government benefits.
The key financial stage of life is the middle-life period of earning. Without proper saving the final decades of life, with no accumulated savings to provide the necessary spending money, will be a catastrophe.
The lack of sufficient savings during your working years could be the most significant financial mistake many Canadians make during their lifetime. And there is an additional problem.
For someone who has difficulty managing their household budget when they have an income, how are they possibly going to manage their finances when there is no income?
A good savings program is key: I recommend investing the time and effort to consider your financial needs over a lifetime and save accordingly.