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Just because the sun is shining now doesnât mean Pennsylvanians shouldnât save for a rainy day, according to the nonprofit organization Corporation for Enterprise Development (CFED). In a study issued a few months ago by CFED, Commonwealth residents rank 14th in the country in financial security, earning a âB.â
Emporium-based CPA and Certified Financial Planner Robyn Kuleck (www.kuleckfinancialplanning.com) said while the results listed at http://scorecard.assetsandopportunity.org/2012/state/pa arenât the worst, itâs not necessarily good news: according to the scorecard, while the average net worth of Pennsylvanians is $100,000, the average credit card debt is $10,000, and more than half have subprime credit.
Kulek said some of the financial troubles people are experiencing stems from the issuing of too many loans from banks to people who really didnât qualify for them.
âThey should never have been put into a position where they were given those loans,â Kuleck said.
However, she added, a lot of the problem rests with having a âspendâ rather than a âsaveâ mentality, and in order to get out of debt and become more secure, people need to actively strive to change that mentality â not an easy thing in a âI want it now, so Iâll get it nowâ culture.
âThereâs not necessarily an immediate gratification to savings, whereas if you spend your money, you get a charge out of it, an emotional uplift, and saving doesnât necessarily bring out that emotion,â Kuleck said.
She noted that the overextension of loans coupled with a high unemployment rate over the past few years has impacted many Pennsylvanians who were not financially prepared to weather the storm.
âItâs frightening. I think we were raised with that concept of job security-- if you do a good job, youâll always have a job. If you work hard, youâll always have money coming in,â Kuleck said. When the moneyâs coming in, youâre spending the money as it comes in, and youâre not really thinking âWhat if?ââ
Kuleck said people who have already run into bad weather when it comes to financial security, whether through lack of planning, overspending, or an emergency situation can still take action to successfully reverse their situation, although it will not be a quick fix.
âThey didnât get into debt overnight. It took some time for the problem to develop; itâs going to take some time and effort for the problem to go away,â Kuleck said. âAnd they really need to look carefully at everything they need to spend their money on-- every time they spend their money, itâs not coming back. Anytime they spend their money, they should think, âIs this the best use of my money?ââ
She said some people who are already overwhelmed can become discouraged in their first few attempts to change how they spend and save.
âThe recommendations are to have six to nine months of your living expenses in your rainy day fund, and when people do the math, itâs a few tens of thousands of dollars, and they give up right there,â Kuleck said.
She said although it takes some effort, people should analyze their spending habits and think about what they could do differently to retain more of their income. She explained that seemingly low-cost purchases like getting a Pepsi from the vending machine at work every day can really add up, and most people donât even consider these purchases when reviewing their budgets.
âWhen they track their spending, theyâll be dumbfounded at what they spend their money on,â Kuleck said, adding that not having enough money to pay the bills, lower credit card debt or handle an emergency medical expense can add to a personâs emotional burden as well.
âI think some people feel desperate. And the anxiety, even if youâre well, [you may keep thinking] âWhat if something happens and I canât pay for it?â Kuleck said. âThatâs stressful.â
Pick up a copy of the Monday, June 11, 2012 edition of The Ridgway Record for more.