Net Worth Poor: Nearly Half of U.S. Households Lack Financial Safety Net

Net Worth Poor: Nearly Half of U.S. Households Lack Financial Safety NetThe post-recession economy continues on a path of slow recovery, but nearly half  of households — about 132.1 million people — do not have a financial safety net to prepare for emergencies or future needs, such as a child’s college education or homeownership.
For the second consecutive year, the report by the Corporation for Enterprise Development on American families “living on the edge” shows that close to half, or 44 percent, don’t have enough savings to deal with emergencies.
This group includes most of the 42.2 million people who live below the official U.S. poverty line of $23,050 in annual income for a family of four. It also includes many who would consider themselves in the middle class, according the report written by Jennifer Brooks and Kasey Wiedrichthe.
One quarter, or 26 percent, of households earning $55,465 to $90,000 annually have less than three months of savings.
Moreover, 26 percent of households are “net worth asset poor,” which the report defines as those with few assets, such as a savings account or durable assets like a home, business or car.
“These asset poor families, whether they lack emergency savings, durable assets or both, are forced to prioritize today’s expenses over tomorrow’s goals,” reads the report: Living on the Edge: Financial Insecurity and Policies to Rebuild Prosperity in America. “These families have made pragmatic choices, in part, to cope with the recession’s continued impact. However, many also lack even the basic tools to save for a rainy day.”
Nearly a third, or 30.8 percent, of households do not have a savings account and some (8.2 percent) have no mainstream financial account at all.
Meanwhile, these families continue to take on debt. The average borrower is carrying $10,736 in credit card debt.
“Unfortunately, more than half (56.4%) of consumers do not qualify for short-term credit at ‘prime’ rates, leaving them to turn to high-cost payday, auto-title or installment loans to make it through another week,” the report reads.
One out of five households with a typical bank account still turn to predatory or high-cost financial products or services.

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