Americans are saving much less and spending more – even though their real disposable incomes are unchanged.
The savings rate just fell to a 10-year low of 3.1%, according to the Commerce Department.
What’s most worrisome to economists is that savings rates below 4% occurred before the last two major market crashes, as people felt what turned out to be a false sense of security, due to rising stock prices and/or home values.
Looks like it’s déjà vu all over again…
I recently wrote how the current bull market is the second longest in modern history. If it manages to last until summer, it will become the longest-running bull market at 9½ years.
A bull market has never made it to its 10th birthday.
In addition, historically, the longer a bull market lasts, the harder and deeper it crashes.
Which indicates the optimism that’s caused Americans to save less and spend more is misplaced. And, to take a line from the movie Grease, that means a lot of people are cruisin’ for a bruisin’.
The vast majority of Americans have little or no savings outside their retirement accounts, according to the latest Federal Reserve Survey of Consumer Finances.
If that describes you, and you haven’t built a solid financial foundation to help you weather the challenges life invariably throws you, you’re taking an enormous gamble.
Without significant safe and liquid cash reserves, how will you cope with a medical emergency… disability… broken major appliance… loss of a job… or a family member needing assistance?
A Lack of Cash Reserves is a Recipe for Financial Stress and INsecurity!
So what’s the solution?
Like much of the conventional financial “wisdom,” the standard advice of having a rainy-day fund equal to three to six months of household expenses won’t cut it. In the last recession, millions who lost their jobs remained unemployed for over a year, or even two.
To have real financial security, you must have safe and liquid cash reserves equal to two years of household income.
But first let’s nail down the definition of liquidity. It’s money you can get your hands on:
- When you need it
- For whatever you need
- Without begging for it or applying for it
- With no penalties for accessing it and no restrictions
- Without sustaining a loss
That short list of requirements rules out most financial vehicles. But by joining the Bank On Yourself Revolution, you get all those advantages, plus:
- It’s an asset that has grown in value every single year for more than 160 years (including during the Great Depression)
- Growth that historically has beaten savings and money market accounts and CDs by a country mile (you’d have to get at least a 5-6% annual return in a tax-deferred IRA or 401(k) to equal the long-term return of a Bank On Yourself plan)
- You aren’t required to liquidate or sell income-producing assets to get cash
- You can use your money and have it continue growing as though you hadn’t touched it (if your policy is from one of the handful of companies that offer this feature)
Find Out Why a Bank On Yourself Plan is the Very Best Place for Money You Need to Keep Safe and Liquid
There are a couple things you can be sure of: Bull markets come to an end, and the crash and recovery can be long and painful. Investing is what you do only with money you can afford to lose – because you very well might lose it!
And in life, you can always expect the unexpected. Whether it’s a critical emergency that hits or a positive opportunity that comes your way, you want to be ready for anything life has in store.
To find out how the Bank On Yourself safe wealth-building method can reduce your financial stress and give you financial peace of mind for life, request a free Analysis.
You’ll get a referral to one of only 200 financial representatives who have met the rigorous training and requirements to be a Professional. They can answer your questions and show you ways to free up money to fund your plan – sometimes without reducing your cash flow or lifestyle at all.
If you take that step today, you could start the New Year enjoying far more peace of mind:
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