Poverty Rate Spikes Upward

Written By:

emptypockets

While many Americans remain optimistic that our national economy has turned a corner, for those who are struggling, times remain very tough—and sadly the ranks of the struggling, according to new government figures, have grown.

Almost 50 million Americans now live in poverty—a striking figure

These new figures from the Census Bureau translate to roughly 16 percent of the population that are barely keeping their heads above water. And the numbers came as a surprise to congress; far from their estimate that the poverty rate would drop to 46.2 million, instead, it surged to 49.7 million from 49 million in 2010. Their expectations were 3.5 million people off.

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Sadder still, almost 20 percent of children now live at or below the poverty line.

Meanwhile, poverty among full- and part-time workers also jumped from their 2010 levels. These numbers are based on an updated formula the Census Bureau uses to help give the government a clearer understanding of the need for social safety-net programs. Suffice to say: the need is going up.

So—what can folks do to avoid joining the booming ranks of the poor?

Sudden, catastrophic events, (job losses, serious health problems, etc.), frequently act as the catalysts for falling out of the middle class and into the poor or working poor. John Lennon is quoted as saying, “life is what happens to you while you’re busy making other plans.”

You can’t always prevent impactful, often negative, events from occurring, so the key is to be able to weather them without losing so much ground you start falling out of tax brackets and onto the public dole.

A rainy day fund is a great way to stand your ground in society when times get tough.

You rarely know when bad things are going to happen—but you do know bad things are going to happen. The most logical way to prevent a personal tragedy from becoming a financial calamity is to have some cash saved up.

A rainy day fund that helps you bridge a sudden shortfall can be invaluable. While the exact size of a rainy day fund can vary, depending on your individual circumstances, having one should be viewed as absolutely necessary for almost everyone.

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Most experts suggest an emergency fund equal in size to anywhere from a few months of your expenses—mortgage, rent, car payment, phone and utility bills, etc.—to a half year or more. And clearly, the bigger your rainy day fund, the better your chances at making at through some prolonged financial storms.

So, while the number of Americans living in poverty has grown, there are ways you can avoid their fate.

Do you have an emergency or rainy day fund? And is it sufficient to get you through the toughest of times?