Forget that pride goes before a fall
Pride can get in the way of preparing for worst-case scenarios.
People tend to feel overly optimistic about their ability to pay back debt, stay out of harm's way and maintain perfect vehicular performance indefinitely.
All human beings suffer from overconfidence -- but Americans more than anyone, says Ronald Wilcox, author of "Whatever Happened to Thrift? Why Americans Don't Save and What to Do about It," and a professor of business administration at the University of Virginia.
"Our nation has seen great benefits from the confidence to take risks. Risk-taking built Manhattan. But there is a dark underbelly," he warns. "There are some winners and they do great things, but there are a lot of losers. And one of the risks that people take is spending all their money now and not saving for a rainy day."
Incredible though it may be, cars do sometimes need repairs, cavities need to be filled and surgeries may be required that insurance doesn't completely cover.
"We hear it all the time, but everyone has got to have an
emergency fund. It's not if it happens, but when," says Gail Cunningham, senior director of public relations for the National Foundation for Credit Counseling.