Many have no savings to survive emergency

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The Columbus Dispatch
By:  Mark Williams
January 30, 2013

More than 2 in 5 Ohioans have almost no savings to cover living expenses if they lose their job or have an emergency, according to a report released this morning.

It says that many Ohioans have little hope for prosperity for themselves and their children unless they're able to put away more money.

The study finds that 43 percent of Ohioans are considered "liquid-asset poor" in that they lack the savings to cover basic expenses at the federal poverty level for three months, according to the report by the Corporation for Enterprise Development. The group works to help low- to moderate-income households build and preserve assets.

But it is not just low-income people who have an insufficient financial cushion. Twenty-seven percent of households earning between $51,013 and $83,136 per year have saved less than what they'd need to live on for three months at the federal poverty level ($5,762 for a family of four), according to the report.

"For a lot of families, it's extremely tough to save," said David Rothstein, project director of asset building for Policy Matters Ohio.

He said the state also lacks policies that would help people save, such as a state equivalent of the federal Earned Income Tax Credit that would provide a chunk of money for people with low to moderate incomes when they file their tax returns. The state also could do a better job of enforcing consumer-protection laws to protect consumers against predatory lenders, he said, alluding to companies that charge high interest rates for loans.

"Other states are being more innovative when it comes to financial security and protecting than we are," he said.

A lack of adequate savings makes it difficult to afford college, buy a home or plan for retirement, the report notes.

Overall, the study ranks Ohio 36th among the 50 states and the District of Columbia based on 53 financial-security measures, such as the poverty rate, the homeownership rate and the percentage of people with a college degree.

In 2012, Ohio was 34th, and the "liquid-asset poor" rate was about the same as this year.

Cara Hill, central Ohio division manager for financial-counseling service Apprisen in Columbus, was not surprised by the results. "The majority of our consumers are unable to save," she said.

When counselors ask people how they ended up in financial trouble, the answer typically is because of a lost job, increased expenses or a drop in overtime-work opportunities, especially for seasonal workers, she said.

"They're in the hardship because they don't have a spending plan," Hill said.

Apprisen tells consumers that they need to have savings that would cover three to six months of expenses.

Hill said in many instances, boosting savings is a matter of getting in the habit of putting small amounts in the bank regularly.

Although the economy is getting better and the unemployment rate has come down, Rothstein said, working families aren't seeing an increase in wages or benefits to help strengthen their finances.

"Overall, the economy has been in recovery; it's just who's sharing in that recovery is the question," he said.

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This page contains a single entry by CFED published on January 30, 2013 4:59 PM.

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