Education Keeps 55% Americans From Building a Nest Egg

It is not spends on expensive coffee or takeout junk foods. The problem is unavoidable expenses surfacing suddenly. Since we were kids, we were taught to save for a rainy day and the reason is to save money for unforeseen emergencies such as your car breaking down, a pipe burst at home or a sudden pink slip from your employer devastating you!

With some safe savings, you do not have to borrow money for unplanned expenses you are forced to incur, from grudging relatives, suspicious friends or preying loan-sharks. Finally, this liberates you unconditionally from a very unhealthy debt cycle. But a new Bankrate study reveals that 23 percent of all Americans have no emergency savings squirrelled away whatsoever. While it is easy to blame this statistic on excessive or compulsive spending, there could be another villain and that is burgeoning student debt due to high cost of higher education.

Burden for American Students

You must have probably heard a friend or two groan and moan about repaying a monthly student loan instalment. Or you might even be burdened with an outstanding educational loan which keeps on growing. Today the student loan crisis has grown into such a massive problem that American students owe about $1.5 trillion which exceeds all outstanding U.S. credit card debt by about $620 billion. This staggering statistic is difficult to digest and makes one think hard about the value received in return. The average Class of 2017 graduates emerged with $39,400 in debt, but there are innumerable Americans who are burdened with loans for twice or thrice that amount.

It does not surprise us to learn that 55% of adults saddled with student debts, blame this as preventing them from building up emergency savings, as per data from Prudential Financial. With such crippling debts, it must be hard to save money for the unknown when you are literally forced to pay hundreds of dollars every month for student loan repayments. However it pays to make Herculean efforts to build a safety net while maintaining repayment schedules for student loans as your debt problem can only get worse, very quickly, landing you in an inescapable debt trap.

Managing Your Savings

When saddled with excessive student debt the only way to save money quickly boils down to slashing all unnecessary expenses. While you struggle to save for unforeseen emergencies, it is surely time to revise your meager budget and find innovative means to cut corners, even temporarily, to allow some emergency savings.

That may possibly mean eliminating costly restaurant meals, canceling gym membership. More drastic measures may include curbing your social life or down-sizing the apartment. But without such proactive measures, you remain vulnerable when faced with an unexpected bill. Another option that should be strongly considered is hustling a second job. Though working a second job may not be an ideal solution for all, it is great for generating extra cash which not only builds emergency savings reserves, but also enables faster debt repayments. And if you think that such chickenfeed at a mere $20 per week from that side job is not worth considering, do think again. Of 44 million adults who hold down a side hustle, at least 25 % earn over $500 a month which is quite substantial. If the current monthly expenses are $3,000 and your target is to save $9,000 (i.e. three month’s living expenses is generally considered the minimum for a solid emergency fund), earning $500 a month from a second job will enable you to attain your goal in just eighteen months

Whether you like it or not, non-payment of your student loans is not an option but ignoring your emergency savings would be equally dangerous. While it is difficult to store away cash when student loan repayments eat up a major chunk of your income, you must overcome that challenge if you wish to stop living life dangerously and eventually emerge as a financially secure individual.

Most Americans are perpetually a few years (or more) behind on their retirement savings schedule. But you could learn a few little-known “Social Security Secrets” which would easily boost your retirement income. One easy trick could pay you as much as $16,728 more annually! After one masters a few tricks and learns how to maximize Social Security benefits, it is our fond hope that you can retire confidently with the peace of mind we are all desperately searching for.