Not just federal employees are unprepared to miss a paycheck
During the recent federal government shutdown — the longest in history — Americans saw and heard seemingly endless heartbreaking stories of people whose lives were thrown into chaos because they missed one paycheck and then a second. Even though the shutdown ended after just over a month, many federal employees weren’t certain when they’d see the money that they were owed. Some contractors, depending on the terms of their contract, may never be paid for that period.
The shutdown put a spotlight on a problem that impacts too many people in all walks of life — not having enough savings to pay for necessities like rent, food and gas if their paycheck suddenly disappeared. That means they don’t have money set aside to cover an unexpected expense like a major car repair or an emergency room visit.
Experts recommend having an emergency fund large enough to cover living expenses for six months. However, according to a survey published last year by the website GOBankingRates, 55 percent of respondents said they don’t have that. Almost as many (54 percent) said they didn’t have enough money to pay for a medical emergency. Fewer, but still a significant number (42 percent) said they didn’t have money to pay for an emergency car repair.
The situation could be even worse than that. In another survey, 58 percent of people said they had under $1,000 in a savings account. Almost a third said they had no savings account at all. Just 28 percent said that they had $5,000 or more in savings.
Building up an emergency savings fund can be difficult to do if you’re living paycheck-to-paycheck, as many Americans are. However, without one, a job loss or unexpected expense can wreak havoc on a family. If you’re in that situation, it may be worthwhile to explore the possibility of bankruptcy. While it’s no one’s first choice, it can sometimes be the best route back to financial stability.