The Atlantic recently published an article called “The Secret Shame of America’s Middle Class.” The piece talks about the fact that most middle-class Americans do not have enough money in the bank in case of an emergency. These same middle-class people are also the country’s biggest consumers.
The article draws from a recent survey conducted by the Federal Reserve Board that found that 47% of people interviewed could not come up with $400 in a dire emergency -- most people would either borrow the money or sell items of worth. Why are so many middle-class Americans struggling to pay bills and make ends meet? According to the article, it has to do with shame (and with keeping up appearances).
The Shame Trap
How often have you heard a friend or neighbor talk about their finances? Has anyone ever told you that they are struggling to pay bills or that they can’t pay for basic things without using credit? Probably not. As a society, we simply do not talk about financial matters. But that has to change.
In order to have that $400, spending has to stop and financial planning has to start. I know it can be very hard not to buy that new item or to avoid spending $500 on Botox or purchase $8 worth of coffee every morning, but when you stop and take a moment to reflect on your finances, you can really start to see where and how you can save those extra dollars.
Look at Your Bank Account
This might seem obvious, but trust me when I say that it isn’t. Most people never look at their bank account statements. I’m guessing you get yours via email and never log in to actually look at it - sound about right? But, if you did, you would see that, yes, you might really be spending $500 per month on coffee or you might have given Amazon (one of the world’s richest retailers, by the way!), $1000 last month.
What’s the Solution?
You need to shame yourself and hold yourself accountable right now. How do you shame yourself? The first step towards getting over that “middle-class shame” hump is to look at your bank account statements for the past three months. Write down all of the things that were either impulse purchases or things that you could live without. Next to the item put the cost of the item. Lastly, add up your monthly totals and see exactly how much money you could have saved in the last ninety days.
This exercise will only take a few minutes but will help you visualize how much you are spending on frivolous or miscellaneous items, and then you can set a goal not to purchase those items for an entire month - or until you have enough money in your bank account to cover emergency expenses should something happen to you or your family.