- Some 73 percent of Americans have less than $5,000 in savings. Further, 35 percent of Americans ages 25-64 have $0 saved.
- And yet, less than 20 percent would take on a second job to increase savings.
- Budgeting expert Amy Blacklock explains why these figures are so confounding and why Americans need to make changes — fast.
It’s no secret money makes the world go around. Whether we’re wealthy, poor or among the vast majority in-between, we see money in action or at least the result of money in action every day. We learn at a young age we need money for things: toys, games, clothes, concerts, food, etc. We might receive an allowance, do chores or obtain a job to earn money, which we then save to pay for those things we want.
So, why do we struggle so much to save for things we need or want as adults?
Somewhere along the line, our mindset shifts. We no longer see the need to save for the things we want. Instead, we adopt the “buy now, pay later” mentality. And then we get stuck with too much debt and not enough savings.
We often hear it blamed on consumerism, keeping up with the Joneses or even our employers, but that only gets us so far. And it sure as heck doesn’t change things.
In a recent GOBankingRates Survey, only 27 percent of respondents said they have more than $5,000 in savings, and a mere 10 percent hold more than $50,000. That’s a long way from the more than $1 million many couples will need for retirement.
|How much money do you have saved in your savings account?||Response|
|Less than $1,000||26%|
|$1,000 to $4,999||15%|
|$50,000 or more||10%|
|$5,000 to $9,999||7%|
|$20,000 to $49,999||6%|
|$10,000 to $19,999||5%|
When you consider that respondents, ranging equally in age from 18 to over 65, are saving for some big-ticket items — a house, retirement, college, cars — these account values are shockingly small.
With similar surveys highlighting Americans’ lack of savings over the years, I shouldn’t be so surprised by the results of this one, yet I am. Why? Because we’ve known for more than 30 years that pensions were disappearing and saving for retirement was on us. A 20 percent down payment for a home has been the recommended norm forever. Plus, raising kids, taking vacations and buying cars have always required a nice chunk of change.
But the majority of Americans will put more time and money into their choice of restaurants this week than they will into their saving efforts this month.
When asked how often they put money into savings, nearly 30 percent of respondents said they don’t know or haven’t been keeping track. The good news is more than 20 percent contribute every paycheck and another 22 percent monthly. With the low savings amounts reported, perhaps some are dipping into these savings before meeting their goals.
|How often do you deposit money into your savings?||Response|
|I don’t know/haven’t been keeping track||29%|
|Every few months||10%|
|Once or twice a year||7%|
Why Do Americans Struggle With Saving?
More than 50 percent claim a low salary or living paycheck to paycheck as an obstacle to saving money. Not surprisingly, this affects more women (57 percent) than men (50 percent).
What might surprise you is that more than 50 percent of every adult age group reported a low salary or paycheck-to-paycheck living as a barrier to savings. And the ones struggling the most? Those 45-64 years of age.
|What obstacle(s) are keeping you from saving more money each month?||I don’t have a savings account||I forget to put money into savings||I have a high cost of living||I have a low salary||I have too much debt||I’m living paycheck to paycheck|
|65 and over||6%||7%||20%||19%||15%||32%|
|55 to 64||6%||5%||15%||21%||16%||38%|
|45 to 54||5%||4%||18%||18%||17%||38%|
|35 to 44||6%||6%||19%||17%||17%||33%|
|25 to 34||7%||8%||22%||23%||13%||28%|
|18 to 24||10%||10%||15%||36%||10%||20%|
So, for anyone who believes that putting money away in a retirement savings account will be easier when you’re older, please think again. The best time to start is now.
What isn’t clear from the survey is how much the respondents earn, how much is spent on necessities and how much is spent on “wants.” However, 37 percent reported they would cut back on discretionary spending to meet a savings goal.
|What would you do or sacrifice if it meant achieving your savings goals?||Response|
|Cut out discretionary spending||37%|
|Take on a second job||19%|
|Downsize/sell high-value possessions||12%|
|Skip holidays and special events (i.e., birthdays)||11%|
|Move across country||5%|
Which leads me to believe they could save more — they just choose not to or forget. Or perhaps it’s because 42 percent of Americans are following the financial management of family and friends, who likely have less than $5,000 saved, too.
|Of the following, what (or who) has proven most helpful for managing your savings?||Response|
|Family, friends, etc.||42%|
|Budgeting methods (i.e., 50-30-20 rule)||26%|
|Personal finance websites, books, podcasts, etc.||9%|
|Mobile budgeting app||8%|
|Personal finance classes||5%|
This leaves me still shocked, with continuing wonder of what it will take to convince people to save more and spend less. I’ll keep writing, though, in hopes of convincing someone to start saving today, before what is labeled as a “strong U.S. economy” by the Washington Post starts to show a few more underlying weaknesses.
Click through to read about your do-or-die retirement plan if you have nothing saved.
More From Our Smart Money Squad
- Want to Break the Paycheck-to-Paycheck Cycle? Stop Caring About What People Think
- Our Road to Retirement: Driving the US to Find the Best Places to Retire
- What I’m Doing Now to Ensure a Cushy Retirement
- Watch: How Much Would You Have If You Saved $1 a Day for Your Entire Life?
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