News & Updates
Struggling Savings Accounts in America
September 03, 2018 | Return to News & Updates
In a recent study by Bankrate.com, it was found that almost 65% of Americans save little or nothing. The study also found that 20% of Americans do not save any of their annual income and the individuals that do save are not saving a lot.
Even with employment rates and wages rising, people are still not saving much. If this continues, a good percentage of Americans will struggle in retirement and have little to no money in case of an emergency.
"With a steady, significant share of the working population saving nothing or relatively little, it's virtually guaranteed that they'll be unable to afford a modest emergency expense or finance retirement," says Mark Hamrick, senior economic analyst at Bankrate. "That amounts to a financial fail."
Experts recommend that individuals save 15% of their income to ensure a comfortable retirement and backup money in case of an emergency.
Life happens. More than one-third of Americans (34%) endured a major unexpected expense over the last year, according to Bankrate’s latest Financial Security Index Survey. Having to pay expenses over $2,000 for replacing a roof, ruptured water heaters, and other unexpected expenditures can seriously drain your savings accounts. Lower wage earners, making less than $30,000 a year are twice as likely to use some form of borrowing rather than savings while households making more than $50,000 are more apt to use savings or cash. The Federal Reserve report found that 44% of Americans couldn’t cover a $400 emergency expense out of their pocket. Are your finances prepared?
But what is keeping Americans from saving? The top answers were 39% at “expenses” 16% at “job isn’t good enough” to save which presumably means that they are not making enough money and they may be having trouble keeping up with expenses such as mortgages, student loans, car payments, etc.
Saving for retirement isn’t as hard as it seems. Anyone that is actively looking to lower their expenses can think about downsizing their home, eliminating excess spending at the grocery store and making it a priority to eliminate debts. You can also think about stressing the importance of boosting your savings to put more cash in your pocket and/or retirement account.
Seven Ways to Boost Your Savings
- Challenge Yourself to Zero-Spend Days. Try to commit to at least one day a week of spending $0. David of Zero Day Finance uses this simple strategy to minimize his spending and give him an extra challenge. The actively avoids buying anything including a morning coffee or an item from the drug store. He pushes himself to fit as many of these days in a week. Since starting the challenge six months ago, David has saved $18,432.
- Cut Out Convenience. If you are hitting up the local coffee shop, ordering takeout, and treating yourself on a regular basis, it could make a serious dent in your budget. Take inventory of your spending habits and decide what is worth the price of convenience and then decide where to make some cuts.
- Pause Before Checkout. Every time you go to checkout, look into your cart and take out 5 items that you don’t need. This will save at least $10 dollars every time you shop without having to use coupons. This also works with online shopping. It is as simple as separating “needs” from “wants” and slimming down on the “wants” that wander into your cart.
- Track Your Spending. If you are unaware of where your money is going, it can be difficult to see where you can spend less. Tracking your spending leaves no room for ignorance as you can see how much you spend on necessities compared to how much you spend on non-essentials like nights out. Find out how much you are spending on what and see what you can cut out or tweak to save a little more each month.
- Make a List. When you go to the store, always, always, always bring a list. We have all been caught in stores tossing items in the cart that catch our eyes. To combat this, make a list and stick to it because those extras can really add up. Focusing on what you need allows you to only spend money on what is needed and discourage extra spending.
- Put Away a Set Amount Each Week. Experts recommend putting away 15% of your income but it is up to the individual on what works for them. If you can only afford $10 a paycheck, great. If you want to put away 20% of your paycheck, that’s awesome. It doesn’t matter how much, every penny put aside in a savings account adds up. As your situation changes, add more or take away from your weekly contribution but never stop completely. Direct deposit allows you to do this without having to see it.
- Invest, Invest, Invest. Investing has fallen by the wayside in the past decade because the younger professionals have yet to see the value in investing. If there’s one thing that all financial professionals can agree on, it is that investing is the key to growing wealth. If you have saved some money and you want to invest, there are plenty of avenues to try. Use your savings to create more return on your savings.
Be sure to stop into your local County National Bank to open a savings account today. We are happy to help with any questions or concerns regarding your savings account.