Are You One of the “Financially Fragile” Americans?

financially fragileI read in a Wall Street Journal article that almost half of all Americans would have to sell some of their possessions if they needed to come up with $2,000 cash within 30 days.  The author called these people “financially fragile”.

Wow!  That’s disturbing statistic.

It’s especially surprising when you realize that a normal emergency expense like a major car repair or a child’s broken arm (which happened to my son a few weeks ago) can pretty easily set you back a couple of grand.

Why Are So Many of Us Financially Fragile?

So what’s the deal?  Why is it that almost half of us would have trouble this level of expense, even though all of us know an emergency is going to happen sooner or later?  I believe it’s because most of us are not paying enough attention when it comes to our finances.

Too many of us only have a vague idea of where our money goes in any given month.  Save a little here, buy a little there, pay the bills, it all works out right?  Except that a large number of us end up hurting when we incur that inevitable $2,000 emergency expense THAT WE KNOW IS GOING TO HAPPEN.

So is this situation happening because of pay cuts, job losses, or a bad economy?

Maybe.

But I think the biggest reason is because the average person just hasn’t been intentional with the family budget and doesn’t usually make a written plan for how to use their money.

Webster’s defines the word intentional as “a determination to act in a certain way;  what one intends to do or bring about”.

When you’re intentional with our money you know where every single dollar is going, and you have control of how the money flows in and out of your life.  Saving money is a lot easier because your intention is to make things flow properly so you can build an emergency fund that will be your life preserver that will keep you from drowning when the inevitable tsunami hits.

When you decide you need to be intentional with your finances you’re definitely not normal.  You don’t become part of the 50% who are “financially fragile”.

When you decide it’s finally time to take action, you’ll change your financial picture for the better, and that’s when fragility turns into strength.

That’s when you start winning with money.

Are you financially fragile?

What are you doing to change that?

Let me know in the comments.

Resources:

Nearly Half of Americans Are Financially Fragile

Eliminating Debt is Like Fixing a Car

Achieving Financial Victory

Credit Card Emergency Funds, an Alarming Trend in Society

How Do You Get Out of Debt? (Part 3)- Emergency Fund

How Do I Start a Budget?

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About Dr. Jason Cabler

25 Responses to “Are You One of the “Financially Fragile” Americans?”

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  1. The explanation of why so many are ‘financially fragile’ is no doubt complex and varied. But for most people most of the time, I think the explanation reduces to this: We consume too much.

    • I would agree that most people do consume too much. When we’re bombarded with so much advertising every day (over 3000 messages a day), it’s no wonder so many people spend more than they make. I’ts way too easy to try to have it all, especially when you’re using other people’s money such as loans and credit cards.

  2. Yana says:

    No, we are not financially fragile, and don’t mind using money when needed – for such things as car repairs, computer breakdown, paying taxes, etc. We are anti-credit and anti-debt, but what petrifies me is any sort of medical/dental expense. We don’t use doctors, and I do my own scaling of teeth, but I am currently very worried because I think I am going to need a filling replaced. Avoiding things like that, where I want only what is essential and the best quality of whatever that is, is why we are not fragile. And I dread having to see a dentist, because I don’t want x-rays or any other service beyond what I absolutely need. I don’t mind paying for the best material for a filling, but I hate being pushed to buy what I don’t want because somebody wants to make their living off of me.

    • It’s great that you are frugal and not “financially fragile”. However, doing your own scaling is unwise and could even be dangerous. You cannot do nearly as good a job as a professional dental hygienist and you will likely end up with more problems (and more dental bills) than if you saw a dentist and hygienist on a regular basis. X rays are done because they show things that can’t be seen otherwise, and a proper diagnosis can’t always be done without them.

      Think of it like car maintenance, if you do the regular maintenance according to the recommended schedule, you end up with less repairs in the long run. Your car runs better and lasts longer.

      If you are going to a dentist you feel is trying to sell you something you don’t need, then ask your friends and family for a good recommendation. Find a dentist that is willing to educate you as to the best course of treatment and is willing to let YOU decide which route is best.

      I know all of this because I am a practicing dentist (20 years) and see people fall into major dental problems on a regular basis because of this kind of thinking. Do yourself a favor. Find someone you can trust and see them on a regular basis. It’s the best way to avoid/minimize problems.

  3. Definitely something to be mindful of. Thanks for your insight. Great post!

  4. Wow, that is a crazy statistic though not very surprising. I wrote a somewhat similar post yesterday and it’s saddening to see stats like these. I know times are tough, but I think a lot of it comes down to choices and being unwilling to start even at small levels in order to start saving.

  5. I think you’re right John, choices make all the difference.

  6. As John stated, this is all about choices and priorities. People were saving their money as the recession hit, but then when they heard things were recovering, they started spending again. These are just poor habits. Habits that need to change.

  7. Fernando R says:

    Having emergency funds is something that every one should try their best to set aside. I know a lot of us can’t afford to put money aside but safe funds come in very handy when unexpected things happen. They have helped me in a handful of situations.

    • JMK says:

      If your regular income really, truly is fully consumed by the very basics of life and there is no extra for building an emergency fund, then perhaps a 2nd (or 3rd) job just for a short time would get the job done? My son had a job 2-3 evenings a week in high school delivering pizza. He easily cleared $150/wk even after reimbursing us for the gas used. At $600/mth it wouldn’t take long to build even a modest emergency fund. You might find, it’s not all that bad and continue a bit longer and knock out a few debts you thought you couldn’t afford to repay. Agreed, heading off to your other job after putting in a full day isn’t fun, but neither are sleepless nights worrying how to pay for the new transmission while still being able to feed your children. Short term pain for some peace of mind.

  8. Eye-opening post, Jason. Although we didn’t know the term for it at the time, the realization that we were indeed financially fragile was what led us to finally make a change in our financial life on January 1st. Technically, we’re no longer financially fragile, but still have a long way to go before we’re out of the woods. Our facing up to our own situation has also helped us to see how very much of a precarious situation most Americans are in right now. It’s a scary thing! Hopefully your article and others like it will help people to open there eyes.

    • Once you wake up and realize how fragile your situation really is. It’s very eye opening! I know because I’ve been there. It’s great to see that you’re facing your situation and doing something about it.

  9. Erin says:

    I’ve been reading several similar, worrisome articles recently. In order not to shatter under the pressure of these “financially fragile” moments, we should invest in ourselves first. There’s room for an emergency fund in any budget. Thanks for the article and the insight, Jason.

  10. As a Canadian I think that your lower income people must be more fragile than low income Canadians. My son broke his arm several years ago and the only thing I had to pay was parking at the hospital and later at the cast clinic.

    I am lower income but I am making better choices and I could come up with 2 grand in less than 5 minutes without selling anything.

  11. That’s great, sounds like you are more prepared than most. Since we don’t have universal healthcare here, a broken arm would result in a large bill if the patient doesn’t have insurance. That means for us Americans, an emergency fund is that much more important.

  12. Not financial fragile and 100% debt free.

  13. Slackerjo says:

    I could write a cheque for $2000 without any problems but for “fun” I listed the things I could sell. I went through my personal possessions. I don’t think I have $2000 worth of stuff except my car. That’s by choice though.

  14. That’s great! It’s obvious you don’t waste your money on a lot of “stuff” you don’t need. That’s why you can write a check for $2,000.

    Thanks for the comment!

  15. Anonymous says:

    You don’t have a clue. The only thing a person has control of in these time is their attitude, not their income, of lack thereof. If you are disabled or suddenly become sick or unemployed, what will you do? People who are poor are not bad with their budget, nor do they consume. No money – no consumption. America is now a third world country. Everyone is trying to sell their “advice” on the internet these days, because no one is hiring. No one pays me a dime, so I’m not going to pay you a dime. So all you’ll get from me is my “two cents”.

    • Travis says:

      The first sentence of your comment is stepping off on the wrong foot, anonymous. You would have been much better off omitting that rude and unnecessary set of 5 words.

      It’s amazing what the proper attitude will get you. You can suddenly become sick and unemployed and wallow in your own situation, or you can work your ass off to overcome your sickness or make the absolute most of your life. You can sit at home and take what the government gives you because you’re unemployed or you can work your ass off to find a new job.

      Yes the economy sucks, but there ARE people hiring. If a person is unemployed maybe it means looking at a new career path, maybe it means a move to a new area. Hustle, determination and attitude can take you a lot of places.

      I also think you’re completely missing the point of the article. It is aimed directly towards an audience of people that are going through life not paying attention to their money – I used to be one of those people. Yes there are people in this country that are busting their ass doing everything they can to make ends meet and it never seems like enough – I used to be one of those people too.

      My attitude went and found myself additional income. My attitude found myself ways to cut my spending more than I would have ever imagined. My change of attitude now has me saving money each and every month and thinking towards the future instead of just the next paycheck.

      • Travis,
        I couldn’t have said it better myself. Well spoken from a man who has been there, done that, and is in the process of changing his life.

        “Anonymous” obviously is more into complaining about his/her situation than actually doing something about it. The lack of respect, as well as the unwillingness to give us a name with the comment says a lot about the character of the person.

        Cynicism will not make one successful. What this person doesn’t realize is that thousands of people have benefited greatly from our experience and advice, Travis. I have found that people are willing to pay for it, and that’s just another piece of the puzzle that has made me successful in life.

        As for the “America is now a third world country” line, it’s obvious this person has never been to a real third world country. Not even close.

        Anonymous, complaining will never get you anywhere. You can be confronted with the truth all day long, but if you don’t believe it, the truth, and the power it contains, will never be able help you.

        Are you willing to engage in a civil conversation and identify yourself, or will you hide behind your anonymity and cynicism?

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