Begin saving for a rainy day now
Just because the sun is shining now doesn’t mean Pennsylvanians shouldn’t 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 “B.”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 aren’t the worst, it’s 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 didn’t qualify for them.“They should never have been put into a position where they were given those loans,” Kuleck said. However, she added, a lot of the problem rests with having a “spend” rather than a “save” mentality, and in order to get out of debt and become more secure, people need to actively strive to change that mentality – not an easy thing in a “I want it now, so I’ll get it now” culture.“There’s 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 doesn’t necessarily bring out that emotion,” 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. “It’s frightening. I think we were raised with that concept of job security-- if you do a good job, you’ll always have a job. If you work hard, you’ll always have money coming in,” Kuleck said. When the money’s coming in, you’re spending the money as it comes in, and you’re not really thinking ‘What if?’”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.“They didn’t get into debt overnight. It took some time for the problem to develop; it’s going to take some time and effort for the problem to go away,” Kuleck said. “And they really need to look carefully at everything they need to spend their money on-- every time they spend their money, it’s not coming back. Anytime they spend their money, they should think, ‘Is this the best use of my money?’”She said some people who are already overwhelmed can become discouraged in their first few attempts to change how they spend and save.“The recommendations are to have six to nine months of your living expenses in your rainy day fund, and when people do the math, it’s a few tens of thousands of dollars, and they give up right there,” 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 don’t even consider these purchases when reviewing their budgets.“When they track their spending, they’ll be dumbfounded at what they spend their money on,” 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 person’s emotional burden as well.“I think some people feel desperate. And the anxiety, even if you’re well, [you may keep thinking] ‘What if something happens and I can’t pay for it?’ Kuleck said. “That’s stressful.” Pick up a copy of the Monday, June 11, 2012 edition of The Ridgway Record for more.