A startled reality

Shared an analysis important for our future.

In doing so, I highlighted billionaire investor Warren Buffett's sage counsel: "Do not save what is left after spending; instead spend what is left after saving." However, I must admit that I had no idea just how bad - downright scary - things had gotten on this front. But to ignore it would mean missing much-needed context for what could become a major credit crisis in America. More on that in a moment. First, back to the problem of savings. According to a recent survey published by Prudential Financial, approximately 4 out of 10 American adults have zero emergency savings, while half of all Americans have less than $500. And if you think this is peculiar to younger generations, think again. A third (37%) of all baby boomers (born between 1946 to 1964) and nearly two-thirds (63%) of Gen Xers (born between 1965 and 1980) reported having less than $500 in emergency savings, with the vast majority of those respondents having no savings. Meanwhile, roughly 60% of millennials (born between 1981 to 1996) and Gen Zers (born after 1996) reported less than $500 in savings, with nearly 40% reporting nothing saved. Clearly, there is a significant savings crisis taking place. And it's compounded by the compulsive year-end spendthrift our culture has conditioned into us. That brings us to yet another financial crisis unfolding in our midst.

Just a few months ago, the Federal Reserve Bank of New York quietly reported that credit card balances had risen at their fastest clip (15% year over year) in 20 years. This is, of course, during an era in which consumer prices have skyrocketed, aggressive monetary policy has significantly elevated interest rates and real economic "growth" has become lackluster to say the least. So here's a question... Do you consider an economy in which a huge number of adults have effectively no savings, and in which many are borrowing more money at higher interest rates to pay for more expensive goods and services, to be healthy? I think the answer's rather obvious. But the main point here is this: The real crisis of our time may not be macroeconomic, but microeconomic - a crisis of personal finance, not just corporate finance.