Friday, 12 August 2016

Saving For A Rainy Day

Work is no fun for most of us and that's a fact. Still in the first world it is generally better, than working in a third world country, where everyday can be a struggle to get the necessities of life. In India for example, despite their huge advances in wealth promotion, about half the population is living a subsistence existence, and are no more than a day or so away from disaster, both financially and physically.

But even in the West, its not all as cut and dried as we like to imagine. For instance, in the US the Federal Reserve Board regularly surveys US citizens financial status .... in 2016 it asked the question. "How would you pay for a $400 emergency?". The answer: 47 per cent of the respondents said that either they would have to cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Just Four hundred dollars .... a lot in third world terms, but a relatively small amount in our terms, or so I thought.

Rainy Day Funds Are Essential For Security ....

David Johnson, a US economist who studies income and wealth inequality at the University of Michigan, said, “People studied savings and debt. But this concept that people aren’t making ends meet or the idea that if there was a shock, they wouldn’t have the money to pay, that’s definitely a new area of research” .... a large minority of US citizens are living in a more or less continual state of financial peril .... who would have thought this. In the UK I doubt the figures are much better, although the availability of welfare safety nets and free medical coverage must lessen the impact of debt a little.

Ignoring the rise of food banks, which frankly are often abused by those who don't really need them (we are not a society to be proud of in that respect), the charity Shelter reported in 2013, that more than one in ten people in the UK are only one pay cheque away from facing homelessness. Thirty five per cent of those currently in employment, are struggling to make ends meet and do not have enough saved to pay their rent or mortgage for more than a month if they lose their job. It also said that 18 per cent of working adults would be unable to pay the rent or mortgage, even for the first month, if they lost their job and were unable to find another one immediately. Putting them in great danger of losing their home.

I am actually a little shocked by all this .... not because there are poor people (the poor are always with us), but because I didn't think this was a general condition, more an unfortunate or lazy small minority.

Prior to this I would have estimated that about 10% of working people might be financially struggling, but that the rest of us were OK for most normal things such as fuel bills or mortgage/rent. I guess that 60 odd years of a full welfare state in the UK, has served us no better than a system with not as much welfare provision, such as the USA. By that I don't mean the actual welfare benefits such as food payments etc ... no I mean the fact that despite universal free education, we still have people leaving school whose education has left them with life opportunities that are still so prescribed, that they are left so close to a financial disaster, that just one or two missing pay cheques will tip them over.

Saving For A Rainy Day - Harder Than I Thought For Many ....

With this information in mind, I must count myself lucky, in that after about 20 yrs employment in what was really just a white collar middle management office role, I was probably far less secure than I might have thought if I was ever asked at the time. However I changed careers, and ever since would never have classed myself as being in that situation again ....same education, just a willingness to start again and use my talents properly.

So to misquote the English martyr "There but for the grace of God go you and I".... I hope!

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