The United Nations has a definition for poverty, it is earning less than a dollar a day. With this definition, no working person in the United States lives in poverty.
Out of 6 billion people in the world:
- 1.3 billion live on less than $1 a day
- 3 billion live on less than $2 a day
These 2 groups added together is more than half the world’s population!
- The average worker in Nepal makes what is equal to $280 a year. Most American workers can clear that amount in a few days
- The average worldwide annual income is $5,000 a year
If you earn $50,000 a year – which is the average US income- you are among the richest 98% of the world.
This means that you are rich. But, you can be rich and still be living beyond your means.
Are you living within your means? (Can you afford the life you’re living?) Only 2 out of 5 Americans are.
How do you know if you’re living within your means?
- Can you pay off your credit cards/short term debt each month?
- Do you have an emergency fund (at least 6 months of total monthly expenses) in a savings account or money market account?
- Are you consistently contributing to a 401K or other type of retirement account? Check out our review of Betterment a tool for growing a retirement account safely and allowing you to allocate your investment between stocks and bonds.
- If you’re in this stage, do you have money to save for your kid’s education?
Most people are spending more than they can afford on at least one thing and often more than one.
If you’re like the 2 out of 5 Americans who live within their means, Congratulations! Teach your friends and family how you manage it.
If you’re like the 3 out of 5 Americans who live beyond their means; It is within your reach! Strict financial plans and goals that are regularly evaluated and adjusted are the key to financial freedom. Building up an emergency savings account or money market account can be the difference between going hungry or losing your house, and being able to calmly weather the financial storm.
Consider using Mint, an online budgeting tool that automatically brings in all the data from your financial accounts and categorizes it for you.
Remember: We are rich, but only as we save and spend our money wisely.