This is an important distinction. CBS reports [1] that a $500 emergency expense would put most Americans in debt. Our consumer-focused economy with easy credit lures people into purchases that they cannot afford. Many spend without careful thought and purchase homes, electronic devices, automobiles, and college educations that they cannot afford to repay.

My wife and I had little savings when I got out of graduate school. Neither of our parents had taught us about budgeting. I found books that taught us how to make a monthly budget. The authors stressed the importance of working together to plan a budget and setting a goal of saving for an emergency fund that would eventually cover six months expenses. We drove our old car until it was too expensive to repair. Eating out was a rare treat. I carried a bag lunch to work. We bought a used tent and camping supplies for a vacation. We had a used B&W TV for years. We were able to purchase a modest house. We never upgraded to a bigger one. A careful lifestyle helped us get our kids though state universities with no debt.

In time we could add more "fun" items because we had a buffer. We were still careful. My employer had perennial layoffs. We knew I could be laid off at any time. Happily, I was ready to retire when my time came (My company went from 65,000 employees in our city to less than 1,700 when I was laid off).

I have a friend who ran his own computer business and counseled (free of charge)many families with money problems. His conclusion was that lack of money was not the biggest problem these families had. He concluded that poor management of what they had was a bigger problem.

[1] https://www.cbsnews.com/news/most-americans-cant-afford-a-50...