Check out this op-ed in today’s New York Times.
I want to highlight this passage:
The recent slowdown in gross domestic product growth is only a symptom of recession, not the cause. While there are many things to blame for the current crisis — most notably the subprime mortgage mess — one factor that has received little attention is America’s low savings rate. In 2005, net private savings in the United States were negative. In other words, we were spending money that we didn’t have, chipping away at our national wealth.
Essentially, if Americans had a reasonable emergency fund, this economic downturn would have been less severe–if not avoided altogether.
The author points out that, "The last time the savings rate dipped into the red was during the Great Depression.
It’s important to remember that we simply cannot continue spending money we don’t have. If we don’t have the money to pay for something, why on earth are we buying it? We need to have several months of an emergency fund put away for these rainy (or snowy) days.
If you’re building up that emergency fund, please keep motivated to stock it all the way. Remember how it feels to be pinched during times of recession.