Personal FinanceSavings

23% Of Americans Save Nothing Each Month

23% Of Americans Save Nothing Each Month

If you were made redundant or taken ill, would you have enough savings to see you through?

The First National Bank of Omaha released its 2019 Savings Survey results which indicate that 23% of Americans do not put any money towards savings from their paychecks. The survey was based on Americans’ priorities, habits and behaviours with regards to saving.

The Executive Vice President (Consumer Banking) at the First National Bank of Omaha noted that setting and being consistent with financial goals is crucial. With the current increase in debt and the standard of living, everyone must have a savings plan.

Savings Survey Findings

  • Seventy-four percent of Americans save 10% or less of their monthly paycheck
  • Twenty-three percent of Americans save nothing at all from their paycheck
  • Twenty-four percent of Americans make monthly withdrawals from their savings account
  • Forty-nine percent (another word for a report) that they only have enough money saved for up to 3 months of living expenses
  • Thirteen percent say they do not have as much money saved as they would like because of student loan debt
  • Other thirteen percent say they cannot save enough money due to credit card debt
  • Twenty-six percent report that they do not have much in savings because of the high living expenses

On a positive note however,

  • Sixty percent of Americans state that they are consistent with their savings so that they can retire by the time they turn 65
  • Twenty-seven percent state that retirement is the major reason for their savings
  • Forty percent are majorly saving right now for their emergency fund
  • Twenty-five percent of Americans have never withdrawn money from their savings accounts
  • Thirty-nine percent say that they will put this year’s tax refund into their savings account

The above survey results show that there’s still a lot of work to do with regards to saving money. That involves creating an emergency fund and paying off your student loans and credit cards. The earlier you act on these, the sooner you’ll reach your financial goals and make the necessary investments for a comfortable retirement. Start taking action today with the following tips:

Create Your Emergency Fund Now

23% Of Americans Save Nothing Each Month

Many financial experts agree that after meeting your basic needs, you must create your emergency fund. However, much debt you are in, your emergency fund is a priority. There’s no telling when an emergency could come up. And there’s nothing worse than having an emergency and no money to handle it.

Why Do You Need an Emergency Fund?

Unforeseen Medical Expenses

Exercising regularly and eating a healthy diet are commendable practices that enhance your health. This does not mean that you can’t face a medical emergency. Sometimes, despite your efforts, unexplained illnesses could still show up. Also, accidents happen without notice. You need to be prepared for such eventualities.

Sudden Unemployment

You could lose your job at any time for whatever reason. Some of them include layoffs, wrongful (or rightful) termination, physical or mental illness and business shutdown.

Car Repairs

If your car suddenly breaks down, it could affect the commute to your job and your other responsibilities.

Major Home Repairs

Unplanned home repairs will require immediate attention. For example, if a large branch fell and made a hole in your roof, or if your heating system stopped working right before winter.

Peace of Mind

Financial distress can cause many sleepless nights and have an impact on your physical (hypertension) and mental health (depression and anxiety). Knowing that you have something to fall back on in case of an emergency will give you a piece of mind.

How Much Should You Save In Your Emergency Fund?

23% Of Americans Save Nothing Each Month

The most popular school of thought is to save six months worth of living expenses. However, there are different recommendations made by financial experts. They include:

  • Build your emergency fund to $1000 first and then focus on paying off your debt. When you’re debt-free, continue to build your fund
  • Three to six months worth of living expenses
  • Two thousand to three thousand dollars for minor emergencies

Don’t let any of these figures and suggestions intimidate you. Any money saved towards your emergency fund is better than nothing, so save as much as you can.

How to Start Building Your Emergency Fund

  • Choose a high yielding savings account
  • Create a budget. This will help you to determine how much you can realistically save in your emergency fund. It will also show you whether you have any surplus income.
  • Decide what amount you want in your fund and start slowly. Although experts recommend 15% of your monthly pay, start with what you can. Even $30 per month makes a difference. You can increase the amount as your pay increases
  • Schedule automatic payments from your checking account into your emergency fund account
  • Deposit any surplus money from your budget into your fund account

Pay Off Your Educational Loan Debt

23% Of Americans Save Nothing Each Month

The survey found the 13% of Americans say that their student loan debt hinders their capacity to save. Paying this loan quickly would help them start saving sooner. Student loan refinancing is the best way to bring down the interest rate. Refinancing means that you can get a new loan with a low interest rate and pay off your old student loan.

According to Nerd Wallet, to qualify for student loan refinancing, you require:

  • A credit score in the high 600s
  • A steady cash flow
  • In case you don’t meet the above, a cosigner who qualifies is your best bet

Several student loan lenders offer interest rates in the range of 2.5% to 3%. This is significantly lower than the interest on private student loans and federal student loans. Student loan financing gives you the liberty to pay fixed or variable rates with a loan period of 5 to 20 years.

The absence of prepayment penalties allows you to make a lump sum payment or raise the amount of your monthly payment. You could add an extra $20 or $40 to your payments to speed up the repayment process.

Pay Off Your Credit Card Debt

Credit card debt is another reason that Americans aren’t able to save. So, how can they pay off their debt faster? Consolidating your credit card debt can help you pay it off faster. You can do this using a personal loan from realisticloans.com. This is also referred to as a credit card consolidation loan.

Using this loan, you can consolidate your credit card debt into an unsecured personal loan. The loan term is between 2 and 7 years. The amount that different lenders offer varies between $1000 and $100,000.

With a personal loan, you will constantly pay the same interest rate because it is fixed. You won’t have to worry about increasing your rate.

For every reason that Americans are not able to save money, there is a possible solution. The emergency fund is a priority and however little money you’re able to save, put it in that fund first. To make it manageable, you could build up a buffer of $1000 first, then continue with it later.

For the student loan and credit card debt, hopefully, the above information will help you make your payments faster so that you can start saving for retirement as soon as possible. Remember, it’s never too late to start.

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Poppy
About author

Poppy loves personal finance almost as much as she loves her two cats, Tif and Taz.
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