Editorial: Many families in state lack the needed savings
Americans never have been the frugal "savers" that you find in many other developed countries.
The average personal savings rate in the U.S. has been around 5 percent, much lower than other countries such as Germany, France and Spain.
The slow recovery of recent years has made saving even harder, and a new report by the Corporation for Enterprise Development shows that about 44 percent of American households lack the savings to cover basic family expenses for three months if a lost job or medical emergency disrupted their normal income.
In West Virginia and Kentucky, the percentage is closer to 48 percent.
Those households, of course, include most the 42 million who live below the official poverty level of $23,050 for a family of four. But it also includes many families that would be considered "middle class." For example, almost 26 percent of households earning $55,465-$90,000 annually lack that three-month cushion.
The study also shows families taking on more debt, and often unable to invest in long-term assets, such as a home, business or even a college education. In fact, home ownership dropped from 67.3 percent of Americans in 2006 to 64.6 percent in 2010, and median net worth fell by $27,000 to about $69,000 during the same period.
Even the experts offer few short-term solutions, but connecting more households to the "financial mainstream" would help. Only 52 percent of West Virginia households have a savings account, one of the lowest rates in the country and far below the national average of nearly 70 percent.
In our region, the United Ways' Financial Stability Partnership can provide lower income families with strategies and assistance on maximizing income and building savings. That would be an important step in the right direction.