According to the sixth annual GOBankingRates study of savings, despite a strong economy, most Americans are struggling to save money.
2014 GOBankingRates poll Americans to see how much they have in savings account. In 2019 adults from all USA was asked six questions in order to learn how they nanoplat savings and what hinders to save more.
The results show that compared with the results of the previous year increases the percentage of people whose savings are virtually absent. In 2019, 69% of respondents said that their savings account is less than $ 1,000 compared to 58% in 2018.
The main results
Almost half of respondents — 45% — said they have 0 dollars in a savings account. Another 24% have saved less than $ 1,000.
The respondents claimed that they live from paycheck to paycheck. In this regard, almost 33% of respondents can’t save at all, about 20% said that high cost of living does not allow you to save more.
About 38% believe that they will be able to save more while increasing wages, and 18% said that a reduction in the amount of the loan will make possible the accumulation of funds.
33% of respondents stated that they use a savings account to store their savings, 29 per cent have no savings at all.
Almost 70% of Americans have less than $ 1,000 in savings account
The survey showed that in 2019 Americans would be harder to save money. In 2017, 57% of respondents said they have saved less than $ 1,000. This percentage increased slightly to 58% in 2018.
This year it grew to 69%. This figure includes 45% of respondents who have absolutely nothing in the savings account. The percentage of respondents with a zero balance was not so high in 2014.
“In fact, savings of $ 1,000 will not provide enough aid to cover many emergency costs. This will be just a “starting point for achieving financial security — it should not be the ultimate goal,” said Bruce Mcclary, the representative of the National Foundation for credit counseling.
Adult middle-aged women, it seems, are experiencing the most difficulty in saving money. The survey showed that 51% of women vs 38% of men have 0 dollars in a savings account. And 53% of respondents aged 45 to 54 years old have no savings, the highest percentage among all age groups.
A quarter of Americans focus on retirement savings
In addition to figuring out how much (or how little) Americans have in their savings accounts, the study sought to find out why people save. The plans for 2020 26% of the respondents indicated a desire to ensure his financial security after retirement.
Older people are much more likely to save for retirement than younger respondents — 74% of respondents aged 55 and older said that most are saving for retirement. Men more often than women saving for their retirement — 28% vs 23%.
No cash for unforeseen expenses people who ultimately use their retirement account — which is a big mistake because you will have to pay a penalty for early withdrawal and taxes on the amount you withdraw from retirement accounts such as 401(k) or IRA.
The survey showed that 19% of respondents make savings for an emergency Fund, making it the second most popular purpose of saving after retirement. The survey also showed that Americans will save more on vacation than on a car, home or study.
The cost of living constrains Americans
One of the main reasons why respondents said they don’t save is that the cost of living where they live, high. It seems that this year more problems, because 20% of respondents stated that cost was a barrier to saving, compared to 18% in 2018.
“The growth in the cost of living in many cities, budgets, people are becoming denser and denser, with the result that they have less money to save money”, — said Mcclary.
However, the biggest obstacle to saving is living paycheck to paycheck. Almost 33% of respondents said that this prevents them to save more — compared with 31% in 2018.
Adults aged 35 to 44 years argued that the cost of living does not allow them to save more. And women are much more likely than men to have experienced this obstacle — 38% versus 27%.
According to Mcclary, it is a symptom of a more serious problem: “It is often the result of the fact that a person has no spending plan, and he monitors what he spends, and does not track your income”.
According to Macclary, stoico to take the time to sit down and make a budget. It can help people to break the vicious circle. 9% of respondents said that the lack of knowledge on how to budget, stopping them from saving more. A study on financial literacy conducted by the National Foundation for credit counseling in 2019, showed that less than half of Americans have drafted a budget, and they are closely watching how much they spend.
Americans need higher wages to save more
Taking into account the fact that lives “paycheck to paycheck” was named as the main obstacle to saving, it is not surprising that respondents believed that the main thing that they need to save more money is a higher salary. About 38% of respondents said that a big salary will allow them to save more.
Reduction of a loan or debt reduction — the second reason that prevents Americans to save more — about 18% chose this option. Although the respondents said that high cost of life is one of the major impediments to savings, only 9% said that moving to an area with lower cost of living is the first thing that will help them.
Americans prefer savings accounts, but many do not have savings
The study showed that respondents who save are likely to keep their money in the savings account, of about 33%. However, an almost equal percentage of respondents — 29 percent — indicated that they have no savings.
A savings account can be a good place to store emergency funds, because the money is easily accessible. But this is not the place to put retirement savings because the interest rates on savings accounts is relatively low. Regarding the long-term savings accounts such as 401(k) and IRA, they are definitely better due to the tax benefits that they offer. They also allow you to invest in stocks or mutual funds that usually offer a higher rate of return than traditional savings accounts.
How Americans can save more
Although the survey showed that Americans are faced with various barriers to savings, MacClure said that there are simple steps that people can take to save more and improve their financial security.
“Find the motivation to save. The knowledge that you need to save, and motivated are two different things. So if you need support, to save money, think about the consequences of not saving, said Mcclary.- Think about the problems in the future: if your savings account is blank, the picture is pretty scary. It can motivate to do something right now.”
Make savings a priority. You don’t have to wait until the end of the month to see how much money you have left to snooze a certain amount. Instead, you should create a budget and include savings in the beginning of the list of basic expenses. To determine how much you can highlight, fold up the expenses that you should cover, and identify nonessential expenses you can cut to save.
This does not mean that you should abandon what you love. Search for free and cheap alternatives. Also, look for ways to reduce their monthly bills by comparing tariffs with other providers or negotiating with your current suppliers.
To automate savings. To save money, ask your personnel Department at work to contribute part of each paycheck directly into a savings account.
To find someone to prosecute you. Share your savings goals with a friend or family member or seek help from a professional. According to Mcclary, the National Foundation for credit counseling is the member agencies in all 50 States, where you can sit down and create a budget for free.
Stop worrying about failure. According to Mcclary, the main reason people don’t care about the budget and not saving is that they are afraid of failure. Instead of afraid to make a mistake , admit that it is possible from time to time stumble on the path to reaching their financial goals. Just make a commitment to learn from those mistakes.