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Sunday, November 4, 2012

Emergency Savings: An American Concept?

Almost back from a bout with the flu, or something. Dire times at Frugal Son's place of employ.

Frugal Son is working (under-employed at the moment) at a tiny bilingual school, one of the many charter schools that popped up in the post-Katrina years. Last week the employees learned that--because of a mistake made by the former financial officer (???maybe, rumor mill at work)--three of the non-teaching staff were let go. The lowly paid staff, I'm sure.

Frugal Son was shocked that one employee--who had been working for two years--had no savings. A request was circulated amongst the staff: please donate what you can. I'm no longer shocked by such requests: I've gotten many over the years, including some for helping with funeral expenses.

Frugal Son was worried for the woman, but also incredulous that she hadn't saved anything for a rainy day. I mentioned that after two years, she would surely be eligible for Unemployment.

That made him feel better. Then he said, But she's French. I'm assuming French people employed in the US are eligible for Unemployment? Right?

But then I wondered: do French people--or Europeans from the wealthier countries--have a concept of an Emergency Fund? Does the social safety net function as an Emergency Fund? Is the Emergency Fund an American concept, owing to the very lack of that safety net?

Does anyone know? Frugal Son has a tiny emergency Fund at the moment, but he's only been working since mid-August.

6 comments:

Terri said...

I've never pondered the problem of being in the US on a working visa and possibly not having a small bit of savings. I know I'm fairly OCD about it myself...to the point that I don't know how to quit saving.

Shelley said...

You read that the Japanese save x% and the Germans save y% and they all save more than Americans. Then again, not everyone meets their national profile. I know people here in Britain who spend every penny and more while others like me have savings beyond what could be called 'emergency'.

I have a German friend, a professor / doctor who will have made in the neighbourhood of £100,000 / year but she mentioned once having to refinance her house to come up with £5,000 for her daughter's university tuition. I was shocked by this, particularly now a couple of years later she is desperate to leave work and wonders if she'll be able to keep her house on her early (lesser) retirement income. I'm giving her The Complete Tightwad Gazette for her birthday this month!

I've finally moved into investing rather than saving, way too late to make big profit, but still perhaps the right decision. Too soon to tell, really. I'm definitely not putting in any money I can't afford to lose.

My guess would be that the French woman would be entitled to unemployment. Last I understood it, the employer pays into that fund and pays more if they fire/lay off people. However, as I understand it one can only draw unemployment for something like 16 weeks, at least that's how it was in Oklahoma back in the 90s. People here in Britain can live their entire lives on 'Jobseekers allowance', though that too is changing, I hope.

PS Would you consider removing your code thingy? I'll keep trying, obviously, but this is my third go. Blogger really does catch most spammer comments - I have about 4 times the number of those comments than real comments, and I never see them. I don't know why the codes have to bee this hard - other blogging platforms just ask you to tick a box.

Patience_Crabstick said...

Purely speculation here, but maybe the more robust social programs in European countries mean there is less of an incentive to save?

Wow, that sentence was grammatically tricky. Apologies for unintended subject/verb disagreement.

I've found you can beat spam on blogger by turning off the word verification and also not allowing anonymous comments. If you allow anonymous comments, you're quickly inundated with spam.

buonodamangiare said...

I've been reading your blog for quite some time now - found it via the Vivienne Files. And I'm very surprised to see this entry as I'm pretty sure your son teaches at the school where my daughter attends kindergarten. Small world!

Duchesse said...

Can't help you on whether she qualifies for UI

re Patience Crabstick's hypothesis that the "more robust social programs" might br creating less of a disincentive to save" in Europe: I am Canadian Canada (and am also a US citizen). Our social programs are more extensive than the US's especially where I live (Quebec); for example, day care costs parents $7/day (per child).

Funding for social programs comes from high taxes, so that shifts the burden to the working population. But people still need savings (it takes awhile working to qualify for UI, for example), and the Governor of the Bank of Canada has been hectoring people since the last recession about saving more.

Frugal Scholar said...

@Terri--I'm OCD too. I keep vowing to change, but then something always happens to make me glad.

@Shelley--I also have seen those percentages and wondered. Code thingy is gone. Didn't even know I had it.

@PC--I've always had an incentive to save--many moments of terror in my life (financial terror, that is). You managed that sentence very well--brava!

@buono...--It's a wonderful school, isn't it? Hope things work out. Hi, from across the lake. And thanks for reading.

@Duchesse--I've read, though, that Canadian taxes are no higher for most--in spite of what many think. Not sure about the specifics.