How close are you to bankruptcy? If you or your family lost all your income tomorrow, how long could you survive? How long would your savings last? If you sold everything you own, how long would that add to your savings? Really think about this question. Would it be a month, two months, a year or the rest of your life?
There was a report done by Dun and Bradstreets Consumer Credit Expectation Survey. It found that 39% of respondents would only survive 30 days on their current savings. So as you walk out to your letterbox today, look around at the other houses. Thirty-nine percent means 4 out of every 10 houses you see would be struggling in 30 days to pay their bills if their source of income stopped tomorrow. Are you part of the 39%, or could you hold out for a little longer?
It’s an interesting question and I never really thought about it before. However, if Australia ever went into a depression (no not a recession but a depression with a “d”) things would get pretty ugly. In our last depression in 1929, Australia got to a high unemployment rate of 28%. Now that is up there. While this might seem out of the question in 2009 who’s to say when tough times will come back to haunt us. And I’m not just talking about the Global Financial Crisis; a depression might not be in the pipeline for 20 years.
I guess I have (and probably like you) have only grown up in good economic times. Sure I have been through a few recessions (including the one we are in now). However, I’ve never seen soup lines or people en masse begging in the street. (I hope I never will!)
There are people out there even some people I know, that have good jobs, who are intelligent and work hard, however they have no savings. None! They also have very few assets of any value. These people are 100% in the 39% range.
Plus some of these people even have families to support. They are flying very close to the sun; if a financial depression hits they will more than likely be the first to suffer. But they don’t even need a financial depression to come; what would happen if they had a disaster in their life. What if they lose their job? They get sick and they can’t work; or a million other things that could kill you financially?
I was unaware that 39% of Australians lived this way. So what can be done about it? We need to start teaching kids in schools about money and credit. Give them a history lesson on the past and what they need to do to survive in the future. When I went to school I spent quite alot of time doing science. Each year we learnt about electrons and microns. However, I have never used that once; not a day in my life. On the other hand, I was never taught how to run a home budget. However, I need to do that every day. I believe that kids in schools should learn how to run a home budget right from the start. This should help drop that 39% rate down in future years.
