The Number One Reason Most People Are Broke or Have No Emergency Fund

It is common knowledge that having some kind of emergency fund or savings is a wise idea. Your car can break down, you might bump into some health issues, etc. 

Some experts don’t like the whole “emergency fund” concept. To them, your savings should go to retirement or investments.

Regardless of what you believe, you can agree that most Americans would be in trouble if they encountered an unexpected money issue. 

When this happens, they either get late notices and extra fees or sink deep into credit card debt. All this makes it even harder to build up their savings.

This is a common issue with people below the age of 35 years. They are not prepared for retirement or an emergency. 

Some of them would love to but they are still in school, building their career or have the burden of student loans. 

However, there are low income people who have managed to save enough for retirement. So low incomes may not be the real problem here. 

Why Aren’t People Struggling to Save?

This is not an insensitive question. Things are tough, thanks to job loss, huge student debt, stagnant wages, etc. Financial situations vary from one person to another. But there is one thing that would make a difference in everyone’s financial life; can you guess?

Living Below Your Means

In theory, this is simple. But when you start doing it you will realize that it gets hard. 

Living below your means basically means spending less than you make, not living paycheck to paycheck and making better money decisions. This could mean eating out less, living in a cheaper house, downgrading your car, etc. 

People love to compare themselves and keep upgrading their lifestyles to match those of their friends. 

Living Below Your Means: Misconceptions

It is widely assumed that you have to be super frugal to live below your means. 

Which is not true.

You can enjoy life and have some good times. Besides, you won’t be struggling to pay your bills, your pockets will not be stressed and your mental health will improve.

Don’t worry about how others will see you. Stay in your lane. The people you are trying to keep up with may be knee-deep in debt for all you know. 

Living Below Your Means: How to?

Monitor Your Spending

Create a list of your expenses. Go through the list and check what is important and what needs to go. If you can, find cheaper options. 

Refinance for Less Interest

Student loans and their burdening interest rates are weighing down many millennials. Refinance your loans through services such as Credible. It is free and your credit score will not be affected. 

Smart Car and Home Purchases

Don’t go buying the most expensive stuff just because the bank says you can afford them. Find a cheaper home and get a used car. 

Pay Yourself First

As soon as you receive your income, pay yourself before you pay any bill. Save that money and invest.