I'm actually surprised that it isn't "0 paychecks". Most people I know barely have enough money to pay their bills currently.

Not to mention the fact that unemployment insurance usually isn't even close to enough to cover your living expenses, or even many people's housing expenses.

I'm also surpriised only 50% don't have savings to fall back on. I'd have guessed it was more like 60-70%.

I currently have only a 3 month emergency fund. I'm working on pumping it up, though. Just when I get another couple grand in there, something comes up- like car repairs, etc. Ugh.

Someone I work with just got his pay doubled, and after complaining the week before that he had *zero* dollars to his name (not even enough to take public transit to/from work for the week), once he got his new pay raise paycheck, he suddenly started splurging everywhere.
I think this is pretty typical of a lot of people - they think in terms of "I'm making X dollars a year so I can afford to spend all this money I don't actually have yet." Nevermind that he could lose his job tomorrow and be broke all over again.
I could probably survive for 6 mos on my savings. Never take anything for granted.

What happened to the idea of an emergency fund? Well, it's tough to build up an emergency fund when you're living paycheck to paycheck.

What is really scary about the chart on that article. Is that 25% of Baby Boomers fall into this category.

Not to sound ageist or anything, but If you are over 50, and still living from paycheck to paycheck -- what exactly is your retirement plan?

@Saboth: Sadly I am one of those people, between rent, student loans, credit card utilities I can only save about $50 per month and most of my friends (1-2 years our of college) can't even save that

@CreativeLinks: Ebaying that barbie doll you had as a kid?

@CreativeLinks: The retirement plan is to sell their home, then take the cash from what little equity they had and buy a single-wide trailer in Florida while working as a greeter at Wal-Mart.

emergencies are not "allowed" when you live paycheck to paycheck. It's only the 11th and I have $80 in my checking account after bills and student loans.

It took me a while to get in the habit, but I get paid once in the beginning of the month, and put the max into savings that I can after expenses & bills. It's in an ING account that takes a while to transfer the money back, so it's not have instantly available. I don't even consider it part of my available funds now, which is good. Been doing it for ~ 7 months now and probably have enough already to live for a year in a pinch.

The problem is that, you start to save, and then ... something happens (you get sick, your kid gets sick, you need new tires, whatever), so then you're back to 0. So you start to save ... then something happens again, and you're back to zero.

@CreativeLinks: ...what exactly is your retirement plan?

Other people's money?

Raise a bunch of consumption addicts and you'd better also build a matrix for old age. That, or legalize organ resale on eBay so they can cover next month's cable bill.

I'm probably somewhere between 2-4 paychecks away. What would almost hurt even more would be job loss that cancels healthcare. I can scrounge up day labor jobs to put food on the table, but medical bills can pile up really fast.

Seriously, ThickSkinned. People just go, "SAVE! You have to SAVE!" acting like it's easy -- but it's not. Especially if you barely have enough money month-to-month to cover the bills as it is! This is especially true for people with kids, or for those who were doing fine, got sick, then lost their jobs or something.

Not all of it is because people are irresponsible. Some people just can't get above water enough to save.

Where's Dave Ramsey when ya need him?

What is this 'retirement' you speak of? I'm going to be working until I die.

How the hell do people manage to get any kind of increase these days? I was promised a MUCH needed raise a year ago, that has yet to appear. I realize that consumerist isn't the place for bellyaching about one's own problems, but I think I can speak for many when I say I'm sick of this situation. I just recently paid off my credit card, and live WELL below my means, it's just that expenses eat up so much income. If someone would have told me that this is what a college degree gets you, I definitely would have considered alternatives after high school.

I [i]had[/i] a pretty good "emergency" savings, but then I got laid off and it did what it was supposed to do. Now i'm about 1 month ahead.

It's all self-reported, which casts the validity in doubt. I'd contest that the average American has absolutely no concept of how they'd survive without their current jobs. An opinion poll in a recession is like a Rorschach test given to a clinical depressive - you'll get dismal answers. Ask this question in 2006 and all those HELOCs would prompt different - and equivalently worthless - answers. Uncertainty and fear is driving this study instead of real analysis.

@CreativeLinks: I believe the simple answer is: "us" (those of us still young enough to work once the boomers retire). The younger generation will merely have to set aside %75 of their income so their irresponsible elders have luxury and carefree living until they die. hooray?

People weren't splurging - they were *living richly*.

I recently (November) took a job where I make $25k more. Every bit of that extra is going into savings + the 10 percent I was saving before.

Motivation? Throw the numbers in an Excel sheet and see how much you can make even with 4% interest.

I'm probably at 6 weeks.

I can't wait until some smug bastard gets on here and proclaims that they pay off their credit card every month and make x amount of dollars through bonuses or remind everyone of how much they...

I have enough money socked away to pay my rent for about four months, but that's not including other expenses or gas.. so probably closer to something like 2-3 and a half.

Unfortunately the title of this article hit home recently when I was faced with a $2000 medical bill and had to basically liquidate everything in order to deal with it.

There are a lot of disincentives to saving. If you are working, then you probably have a 401(k) or something similar that can't be touched until you are 65ish. Any money you have on your paycheck has been taxed. Then if you manage to put any of it into a savings account, you get taxed on the interest it earns. Not to mention that the interest rate at most banks is practically zero.

Even the previously "good" banks like ING have dropped their rates to around 1.6%. So if you have $10,000, a year later you have about $170 in interest compounded (though it actually ends up closer to $120 after taxes). Really?

@spoco: Gah, jealousy.

@edwardso: Same. Living in New York is expensive.

I'd save, but I had emergency car repairs and other necessities crop up that have gotten me in credit card debt. It makes no sense to save anything when you have thousands in debt and are being charged interest on it. I figure I put everything I would be saving toward the debt and if, God forbid, an emergency happens I'll just use the credit again.

@edwardso: some of my comment got eaten

how much they would save if they canceled cable, used prepaid cell phones, etc.

Wait, when did Consumerist hire one of the usual "Everything the OP did is wrong" crowd to post?

News flash, most people don't have an emergency fund socked away because they CAN'T AFFORD IT. If you're living paycheck to paycheck, and/or have significant debt (you know, from frittering away money on medical bills), you don't have a margin for saving that much. "Gee, I could make sure the power isn't shut off, but what about my rainy-day fund?"

@lpranal: College degrees really don't mean much anymore, unless they are highly specialized. I was told a college degree would take me anywhere, but after I got one I realized anywhere was only 1 or 2 jobs within that field. Anywhere else, people ask "what are you even doing here?"

@spoco:
What savings account is paying 4% these days? Mine is down to less than 2%. Bleh.

I have about a year left.

I've worked with many people who would brag about their rent-a-center TVs, stereos, etc. I wonder how many of them are completely broke right now and completely insolvent.

nakedscience said:

"The problem is that, you start to save, and then ... something happens (you get sick, your kid gets sick, you need new tires, whatever), so then you're back to 0. So you start to save ... then something happens again, and you're back to zero."

Welcome to my LIFE!!!!!

@Oranges w/ Cheese: I'm only 29 but I have had three unique post-college financial phases.

Phase 1: Job paid crummy + My first real place + buying everything I wanted = debt, debt and debt.

Phase 2: Good paying job + a little smarter with money + delaying gratification = living tight but paying off debt, debt and debt.

Phase 3: Great paying job + a lot smarter with money + being a savings nazi + no debt = doing okay and not worried about myself during these times - friends are losing jobs left and right though. I hate it for them.

@edwardso: yea ... most people I know don't have all that much they can save if they paid for their own college education and whatnot.

being a 20-something isn't very easy in these parts (boston) :\

@ThickSkinned: It's about setting priorities. How many people living paycheck to paycheck still have cable/satellite TV? Cellphones? Eat out more than once a week? Buy new stuff instead of used?

$6 = A combo at Wendy's = 1 meal for one person
or
$6 = A honking pot of spaghetti = 10+ meals for one person.

@winshape:
Yea but you'd still have your $10K to use in an emergency, which is kindof the point of having a rainy day fund...

I really don't know what counts as "expenses" in these surveys. Could I pay my mortgage + taxes and still eat? Sure, for about two years.

I'd have to think long and hard about cutting off my car insurance or downgrading to the minimum liability amount. I wouldn't buy any new clothing. Cable and internet -- gone.

So I could cover essential expenses much longer than I could cover my current standard of living.

As people are saying above, I am not sure why this would surprise anybody.

Saying things like "Apparently many Americans haven't heard of this practice" or "there are still significant numbers who simply didn't plan for the future" doesn't seem fair.

There are so many people, myself included, that are smart enough to save. I thought ahead of time and developed an emergency fund and saved for a "rainy day." I had several months worth of income in both cash and a steadily building 401K. But you know what? It hasn't been just a rainy day, it's been a rainy year for most people. I had quite a bit of money saved, but then the company I worked for (that was the biggest company in its field) tanked. That left me without a job- where I was making a pretty good amount of money, allowing me to save quite a bit and start paying any debts I had acquired during my education (namely student loans).

When a company goes out of business and floods the market with more qualified people in your own profession, it sure makes it hard to find a job making what I was making before... in that situation, you take whatever job you can find.

Unfortunately, that means I am not making enough to save. And then things come up (the rainy days) where you need to spend that money you had saved. Medical bills, car repair, house repair blah blah blah. So now I am one of those people who you imply "apparently hasn't heard of this practice" of saving and is no forced to live with only a small reserve.

Sorry to rant, but it seems unfair to assume people don't know that they should save money. Not all these people are idiots. To assume that people "simply didn't plan for the future, didn't sock away extra money, didn't think they needed savings" or "simply spent all they had without a care for the future" seems very arrogant.

@cc82:

Holy cow, are you like my twin or something? That sounds like my savings set up.... which one of is the evil one though?

Everybody seems to bring up the medical bills issue. While true that many people get stuck with them, most of the people this effects are/were living at or above their means in the first place. If you are carrying credit card debt and haven't had a major layoff/medical stuff/, you're doing it wrong.

/However, if you do have CC debt, by all means, please pay it down before you start trying to seriously save.

If you were to believe the New York Lottery commercials, you would be just one lottery ticket away from not having big financial problemos. They really drive this home with the freaky leprechaun but not a leprechaun little guy with a big head, small body, blue blazer and glasses.

@Dillon Barfield: Agreed. I also live in the Boston area. It's friggin' expensive up here!

@FatLynn: Exactly. I could make it about 8 months using my current standard of living, but I would do two things to extend it:

Find gainful employment doing something.
Lower my standard of living.

As a side note, I went to four establishments yesterday - a mid-range restaurants (not fast food), Hobby Lobby , JC Penny and Bed Bath and Beyond. ALL were hiring and announcing it very loudly.

@nakedscience: Usually the problem is that people have no discipline or self-control.

I find it easier to save when you play mind games with yourself. Take your savings off the TOP of your paycheck instead of the scraps that are left over. Sock it in a special account and pretend that it doesn't exist. Make it hard for yourself to get at it.

If you aren't even this disciplined, give your savings money to a trusted friend or relative. Tell them, "Do NOT give me back this money unless the following conditions are met..."

The average person can live on 80-90% of their paycheck with only a few adjustments, leaving the rest for saving and giving!

Don't your expenses drop dramatically if you're out of work? Does this scare-number mean continuing your work standard of living after you lose your job?