Over 20% of Americans Have No Savings or Investments: 6 Steps To Get Started on Yours

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In a nation known for its economic prosperity, it may come as a surprise that over 20% of Americans have little to no savings or investments to their name.

But a survey conducted by GOBankingRates in August of 2023 showed just that. If that still sounds unbelievable, even data from the Federal Reserve indicates that 37% of Americans would be unable to pay for a $400 emergency expense with cash.

These alarming statistics shed light on a widespread financial vulnerability that can have far-reaching consequences. Without a financial safety net, unexpected expenses, emergencies, and retirement can become daunting challenges.

If you are one of the millions of people that have no savings, you may not know where to begin — but you can start by following six tips that experts recommend.

Identify Your Goals

The first and most crucial step in embarking on your savings and investment journey is to identify your financial goals. Take some time to reflect on what you want to achieve in the short term and the long term.

Lillie Louis-Fils, Region Executive for Consumer Investments at Bank of America, said, “Ask yourself, what are my top financial priorities? What is my ideal timeline? Is this goal realistic? Starting with these questions will help you build out an actionable plan to begin achieving these goals, including how much you want to save and/or invest.”

Build a Budget

Once you have a clear objective, you can start to get into the details of how you’re going to get there. The best way to do that is to create a budget — which any expert will tell you is the foundation for effectively managing your money. Getting a handle on how much money you have coming in and out is essential to saving.

Make Your Money Work for You

“In most individuals’ budgets there are many expenses you need to account for: rent, utilities, car payments, student loan payments, health and car insurance, etc. What is left over is usually all discretionary spending money. Instead, try treating savings as a “bill” like the others. This will help accelerate your long-term savings,” Louis-Fils said.

Open Savings and Investment Accounts

You have a goal, and you know what you can save towards it. That’s great – now it’s time to start making it happen. If you don’t have a savings account, opening one is a great first step. Unlike most checking accounts, a savings account will accrue interest. That means your money is making money. If you like the sound of that, you can start exploring investment accounts, which is where even better returns can be found.

Investing involves risk, but you shouldn’t let that deter you. Robert Johnson, Professor of Finance at Creighton University’s Heider College of Business, points out that taking on some risk is a crucial part of successful investing.

“Counterintuitively, the biggest mistake many people make in investing is not taking enough risk. Unfortunately, many people are overly conservative with their asset allocation, particularly in their retirement accounts. The surest way to build true long-term wealth for retirement is to invest in the stock market,” Johnson said.

Automate Saving

It’s hard to break an old habit, and to create a new one, but making a habit out of saving will ensure that you are consistently putting money away.

Make Your Money Work for You

If you’re new to saving, that’s much easier said than done. The good news is that technology has made it possible, perhaps even easy, to automate saving money. It’s far easier to make a habit out of something when you don’t even have to think about it.

“Automatic savings plans can take many forms,” continued Johnson. “For instance, one can have a specific dollar amount or salary percentage taken out of each paycheck and put in a retirement plan or savings plan. The biggest advantage of automatic plans are behavioral underpinnings of the plans. If we are enrolled in an automatic savings plan, inertia and the inherent laziness of people tend to work in our favor. That is, once enrolled in an automatic savings plan, people tend to stay enrolled.”

Start Right Now

Perhaps the hardest part of getting started is, well, getting started. Inertia is a powerful force, and it can be really hard to take that first step, especially when you’re getting into unfamiliar territory.

It’s so much easier to take the path of least resistance and keep neglecting your financial goals. Mike Zaccardi, financial writer at Allio Finance, says that you have to find a way to make the leap.

“Wanting to start isn’t enough to make anything happen,” Zaccardi said. “You can be full of good financial intentions and desire; if you never take the first step, you won’t ever start the journey toward your goals. To get over the inertia that’s holding you back, you need to give yourself that push. Take the first step by opening an investment account and making your first deposit.”

Once you take that first step, it’s quite likely that the rest will just start to fall into place. It’s not even really that hard — as Zaccardi notes, regardless of what bank or investment platform you use, it will probably take you less than 20 minutes to get up and running. 

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