&l;p&g;&l;img class=&q;dam-image bloomberg size-large wp-image-41842820&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/41842820/960×0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Photographer: Daniel Tepper/Bloomberg
A new &l;a href=&q;https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf&q; target=&q;_blank&q;&g;report&l;/a&g; from the Federal Reserve found that four in 10 Americans don&a;rsquo;t have the cash to pay for an unexpected expense without selling a belonging or borrowing funds.
Here&a;rsquo;s what you need to know.
&l;strong&g;Some Positives, Some Areas For Concern:&l;/strong&g;
The Federal Reserve released its fifth annual Survey of Household Economics and Decisionmaking, which reflects generally how well Americans are doing financially.
First, the good news: the survey of 12,000 Americans found an overall economic recovery and economic expansion, including lower unemployment, over the past five years.
When questioned about their finances in 2017, 74% of Americans said they are doing ok financially or living comfortably.
However, several areas of distress remain, including reports of economic disparity, impact from the opioid crisis and ongoing financial struggles with repaying student loans and saving for retirement.
Here are five areas of concern shared in the report:
&l;/p&g;&l;ol&g;&l;li&g;40% of Americans don&a;rsquo;t have the cash to pay for an emergency expense&l;/li&g;
&l;li&g;25% have no retirement or pension savings&l;/li&g;
&l;li&g;Less than 60% can answer at least three basic financial literacy questions correctly.&l;/li&g;
&l;li&g;1 in 5 of adults knows someone impacted by the opioid crisis.&l;/li&g;
&l;li&g;About 25% of borrowers who attended a for-profit college are behind on student loan payments compared with about 10% who attended a public or private college&l;/li&g;
&l;/ol&g;&l;strong&g;Action Steps: What To Do Next&l;/strong&g;
Let&s;s address several of the areas of concern.
Whether it&s;s an unforeseen medical expense, home repair or unemployment, you never know when an emergency will strike.
Make the unexpected more expected by building a financial foundation now.
That means establishing an emergency fund with at least six to nine months (or more) of cash to cover such unforeseen expenses.
Here&s;s the important part: make sure that cash is in a separate bank account that isn&s;t co-mingled with your living expenses. Don&s;t access these funds unless there is an emergency.
It&a;rsquo;s never too late to start saving for retirement.
If your employer offers a retirement plan, and you&a;rsquo;re not enrolled, contact your Human Resources Department. Sign up for automatic contributions, which will be deducted from your paycheck.
Contribute as much as you can afford up to the annual maximum of $18,500 in 2018. At a minimum, contribute enough to qualify for a company match, if offered by your employer.
If you don&s;t have an employer that offers a retirement plan, you can set up a &l;a href=&q;https://www.makelemonade.co/what-is-an-ira/&q; target=&q;_blank&q;&g;Traditional IRA&l;/a&g; (pre-tax contributions) or Roth IRA (after-tax contributions). The limits for 2018 for both a Traditional and Roth IRA are $5,500 (or $6,500 if you are age 50 or older).
&l;strong&g;Student Loan Repayment:&l;/strong&g;
If you&a;rsquo;re about to borrow a student loan, ensure you understand the true financial cost of what you are borrowing.
Your student loans are a financial contract, and a legal promise to repay your debt obligation. Use a financial calculator to understand the full cost, including principal, interest and fees.
Also, remember first to maximize your federal student loans before borrowing private student loans.
If you already have student loans, understand your options.
For federal student loans, you have several &l;a href=&q;https://www.makelemonade.co/student-loan-repayment-guide/&q; target=&q;_blank&q;&g;student loan repayment&l;/a&g; plans through the federal government based on your income that can lower your monthly payment. Some offer student loan forgiveness (such as PAYE and REPAYE) after 20 or 25 years, depending on your degree, but there is no guarantee those repayment plans will continue to exist.
Student loan repayment plans can provide temporary relief, but remember that interest is still accruing on your student loans even if the monthly payment is lower.
Want to avoid headaches with your student loan servicer? Enroll in autopay directly with your student loan servicer (not your bank) so there is no debate when your payments were sent.
If you are having trouble paying your student loans, contact your student loan servicer before problems arise. Don&a;rsquo;t skip or make a late payment, and then decide to take action. Get ahead of the problem.
Your finances don&s;t have to be a headache. Even with limited funds, you can take action to manage your emergency fund, retirement account and student loans.