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Discount Diva: MoneySmart fixes for three scary financial stats

Zombies and ghosts have nothing on real-life money situations. These frightening financial stats will have you sleeping with the lights on.

Scary stat: The median retirement account balance is just $3,000, while 45 percent of folks have saved nothing. Households nearing retirement have saved only $12,000, according to the National Association of Government Defined Contribution Administrators. That’s despite the fact that the next generation of retirees are expected to face some of the biggest financial challenges since the Great Depression. That’s right, the country’s most vulnerable population will face some of the scariest circumstances ever, many of them with zero dollars in the bank.

MoneySmart fix: I’m sorry, I’ll be right with you. I just have to finish rocking back and forth in the corner after hearing that last dismal tidbit.

OK, to avoid a similar fate, start saving now (the younger the better) using a tax-favored retirement account such as an individual retirement account or a 401(k). Save aggressively and max out any employer-matched contributions.

If you’re getting a late start, consider this your wake-up call and get serious. Pick up extra hours at work or start a part-time job. Increase your savings dramatically. Challenge yourself to cut spending and downsize. Meet with a fee-for-service financial planner and make a plan. You may still have to work longer and retire later, but each sacrifice you make now affords a little more security later. You can do this! It’s not too late.

Scary stat: ATM fees have reached a new record high, according to The average out-of-network ATM fee is now $4.57. We’re paying the equivalent of a yummy, whipped-creamy, caramel macchiato just to get our hands on our own money.

MoneySmart fix: Whip out your cell phone and search your bank or credit union’s website for ATMs within their network. If it’s too far, make a cash-back purchase at a nearby store with your debit card. You’ll still get charged, but not as much. If you find yourself at the ATM a lot, you might also consider switching to a no-ATM-fee checking account.

Scary stat: A whopping 46 percent of Americans don’t have enough cash on hand to handle a $400 emergency, whether that’s a car repair, an abscessed tooth or a broken furnace, according to the annual “Economic Well Being of U.S. Households” report by the Federal Reserve.

Counted in that number, 38 percent said they would use a credit card to cover the cost, paying it off over time (and paying interest); 31 percent said they simply would have no means to cover the expense; 28 percent said they would have to borrow the money from a friend or family member; 7 percent said they would have to use money from a bank loan or line of credit; 17 percent said they would have to sell something (yikes); and 4 percent said they would use a payday loan, deposit advance or overdraft (double yikes!).

MoneySmart fix: One really good thing to note here is that this number is down from last year and the year before, when a full 53 percent couldn’t hack a $400 emergency. So things are getting better. (I know, I know, I’m supposed to be scaring you. But so often, the news is better than it seems).

To build up that emergency fund, have money directly transferred from your paycheck to your savings account each week before you see it. Cut expenses, even if only temporarily, and put that money away. A good savings goal is three months worth of expenses, but every penny helps.




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