It’s no secret that the majority of Americans are living paycheck to paycheck. What may be more alarming to learn, however, is that nearly half of Americans have less than $500 in savings — with almost 18% having nothing. This most recent data comes from a GOBankingRates survey of over 1,000 adult Americans regarding various current financial concerns. With less than $500 in savings, most respondents would not be able to cover even relatively small emergency expenses, which puts them at risk of going into debt. Here’s a look at some of the most relevant data from the survey, along with suggestions as to how you can improve your own personal financial situation if you find yourself in the same boat.
Highlighted Insights From Survey Respondents
The headline figure of nearly half of polled Americans having less than $500 in savings is definitely the most jarring result from the GOBankingRates survey. But perhaps equally surprising is that the 45-to-54 age group is the one with the largest percentage in this category of having less than $500 or nothing at all, at 58%. By contrast, just over 39% of 18- to 24-year-olds have less than $500 in savings.
Although only about 21% of survey respondents reported being laid off in the past 12 months, nearly one-third indicated they were “somewhat” or “very” worried about future layoffs.
Overall, being able to pay for housing and paying bills in general were the two greatest concerns of survey respondents. Nearly two-thirds of respondents indicated that their utility bills had shot up by between 25% and 50% over the past year.
Tips on How To Build Your Savings
To avoid being in a situation where your expenses might overwhelm your savings, it’s important to start as early as possible. Even if you’re living paycheck to paycheck and don’t feel like you have much discretionary income, there are steps you can take to ensure you always have an emergency fund. Eventually, you’ll want to try to build your savings up to cover three to six months of your expenses. But for now, here’s how to get started.
If you try to get $10,000 in your savings in just a few months, you’re likely to get discouraged and fail, particularly if you earn the median American income or less. But if you start slowly, you’re likely to find both success and confidence that you can continue to save. Start with just a small percentage of your income, perhaps 1% or 2%, and tuck that away every month. For example, if you earn $3,500 per month, start by saving just $35 to $70 per month. While it may seem like a stretch at first, soon, you’ll be comfortable with it and on your way.
Automate Your Savings
Life can be busy and stressful. It’s also human nature to tend to spend money that’s “just sitting” in a bank account. For both of these reasons, it’s important that you automate your savings. Most banks will allow you to set up automatic transfers from your checking account to your savings account every month for no fee. This will guarantee that you’re saving every month, even if you forget, and it will also get that money out of your account before you spend it.
Incrementally Boost Your Savings Rate
Once you’ve adapted to your initial savings rate, try to boost it in small increments on a regular basis. For example, if you’ve gotten used to setting aside 1% of your income every month, bump that to 2%. After a period of adjustment, raise it again to 3%, and so on. Over time, you’ll ideally want to get to a savings rate of at least 10%. Increasing your rate in small increments will make it easier for you to adapt.
Choose the Right Account(s) for Your Money
Although you can keep your savings account with your local bank, be sure to check out the interest you’ll be earning. Most online high-yield savings accounts pay 10x or more the yield you can get from major traditional banks, all while enjoying the same FDIC insurance and often carrying fewer fees.
Bank Any ‘Found’ or Bonus Money
Anytime you receive any “extra” money — such as a bonus, a tax refund, an inheritance or some other type of gift — try to bank as much of it as possible. While it can be tempting to use that money to treat yourself — and you should, to some degree — remember that you were getting by on the money you had before. Putting this “extra” money into savings and even investments will work wonders in shoring up your financial foundation.
Increase Your Income
If saving is just proving impossible for you — and even if it isn’t — consider ways that you can boost the income side of the equation. Taking on more hours at work, working a side gig, or asking for a raise are all ways that you can increase your cash flow and free up more room in your budget for savings.
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Methodology: GOBankingRates surveyed 1,002 Americans aged 18 and older from across the country on between January 30 and February 1, 2023, asking six different questions: (1) How much savings do you have?; (2) If you lost your job, what would be your immediate concern?; (3) How much do you take financial advice from influencers/personalities on social media, TV/Radio/podcast personalities or other financial experts in the media?; (4) Have you been laid off from your job in the last 12 months?; (5) How worried are you about layoffs/being laid off from your current position?; and (6) How much has your energy/utilities bill changed over the last year?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.