New Mexico's population is among the country's worst for having a stash
of cash available for emergencies.
A new survey shows that 62.8 percent of New Mexicans reported not having enough "rainy day" savings to get through three months of "unanticipated financial emergencies." That's third worst in the United States.
The Land of Enchantment ranked behind only Mississippi and Indiana.
The figures come from the 2012 National Financial Capability Study undertaken by the FINRA Investor Education Foundation.
The study also found New Mexicans were more likely to pay just the minimum monthly payment on their credit-card bills (40 percent) than the national average (34 percent).
Also of note: 25 percent of New Mexicans had unpaid medical bills, right in line with the national rate of 26 percent.
"Nothing about New Mexico (results) really surprised me," said Vicki Van Horn, executive director of the New Mexico Project for Financial Literacy.
Income, banks, 'social capital'
There are several reasons New Mexicans might not have the kind of cushion they need to weather a financial emergency.
The state's lower income level is an obvious contributing factor. According to U.S. Census data, New Mexico's median household income ranks 42nd in the country, and is more than 12 percent less than the national median.
Saving can also be a challenge without the resources of a bank. According to a 2011 federal study, 11.5 percent of New Mexico's households operated without a checking or savings account at a mainstream bank or credit union -- the nation's fifth-highest rate. Another 23.6 percent were considered "underbanked."
"That being the case, you lose out on saving unless you have a really big mayonnaise jar you stick cash in and keep it under the mattress," said Ben Heyward, president and CEO of First Financial Credit Union, noting that many people have an inherent distrust of banking institutions while others -- especially in rural New Mexico -- have limited access.
Another problem is a lack of financial education, he said.
And there may be other, more cultural factors at play in New Mexico. Van Horn said New Mexicans without sufficient emergency savings are accustomed to relying on a network of family and friends when they find themselves in a bind.
"New Mexicans help each other out a lot, particularly extended families (that) do reach in to help family in one way or another," she said. "We may have more social capital than some of the (other) places where you could live."
Then there's just good, old-fashioned optimism: For those who've never experienced an abrupt job loss, divorce/separation or serious health issue, it can be hard to muster the motivation to save for one.
"When things are going well, we underestimate that bad things can happen even though for most people, if you look back a year, you can pinpoint a number of expenses you've had," Van Horn said.
So what kind of cash cache should you have?
Experts recommend socking away anywhere from three to six months' worth of living expenses.
For retirees and those with any kind of job instability, Albuquerque certified financial planner Stephen Madeyski said it's advisable to keep a year's worth of funds available.
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