Americans are falling short when it comes saving money — specifically, setting aside money in savings accounts. In fact, they’ve gone from bad to worse, according to GOBankingRates.com’s latest survey on savings amounts.
In 2015, they asked more than 5,000 adults how much they had saved in a savings account. The results were startling: 62 percent said they have less than $1,000 in savings.
Recently, GOBankingRates asked the question again, this time to more than 7,000 people, to see if Americans’ saving rates have improved in the last year. But the results are even more surprising — the percentage of Americans with less than $1,000 in savings has jumped to 69 percent.
Not only has the percentage of people with little money in savings accounts grown, but so has the percentage with absolutely nothing in a savings account. In last year’s survey, 28 percent of respondents said they have $0 saved. Now, 34 percent say they have no savings. You can see a state-by-state comparison of the savings survey results at https://www.gobankingrates.com/personal-finance/americans-savings-state.
Having access to just $500-1,000 in savings could help most people meet unexpected financial challenges, said K-State Research and Extension family resource management specialist Elizabeth Kiss.
The purpose of emergency savings is to have money on hand in case of emergency or unexpected expenses, but those funds need to be replaced as soon as a household is able to do so after the emergency is over.
Kiss said savers should try to have three to six months worth of living expenses on hand to combat unforeseen expenses.
“It’s living expenses, not income, so it’s likely less than your total income,” she said. “Regardless of the amount, most of us would probably do better to save more.”
Car repairs, home maintenance, storm damage, and unexpected medical bills are common unanticipated expenses and reasons to have emergency savings on hand. While putting money away for the unknown may make saving difficult, having cash on hand allows for less dependence on credit cards and other sources of debt in case of emergency.
The first step in saving for emergencies is to keep a small amount of cash or traveler’s checks in a secure location at home.
“If the power is out in your community, the ATMs may not work,” Kiss said. “If you don’t have cash, you might not be able to buy things you need, because stores may not be taking cards. You want to have a bit of cash somewhere safe.”
Next, set up an account for your emergency savings.
Make a habit of putting money into your emergency fund each month. Decide on a dollar amount, and move it to your emergency fund account each time you receive a paycheck.
“Think about how much you can realistically save every month, and think of it as putting money aside for future uses, rather than just saving for the sake of saving,” Kiss said. “You should also save some money for retirement or other long-term goals, and then you know what you have left to pay monthly bills.”
What if you don’t have $25-50 to save each month? Kiss advised to watch for “spending leaks”– small, regular purchases like gourmet coffees, recreational shopping, soda, candy bars, eating out and trips to the vending machine– and save some of that money instead.
“It doesn’t mean you have to go without,” she said. “Think of ways you can meet those needs, but pay less. If you like to drink pop, buy it at the store. Make coffee at home.”
The ultimate goal is to make saving a priority, Kiss said. Think of an emergency fund as you would any monthly utility.
“You need it just like you need heating, cooling and water,” she said. “Put it in with your bills, and think of it as a regular expenditure.”
The greatest advantage to having an emergency fund is having something to fall back on when the need arises. It provides great peace of mind.
If you need motivation to start saving, or to save more, plan to attend one or more of the Extension Fall Financial Series programs. The first class on “Understanding Your Money Personality” is Monday evening, “Saving Dollars When You Don’ Have a Dime to Spare” will be held on October 11, and “Money on the Bookshelf: Using Stories to Teach Kids Financial Skills” is scheduled for October 18. See the full program descriptions at www.ellis.ksu.edu. All programs are free and held at 6:30 pm at the Ellis County Extension Office, 601 Main Street in Hays. Enter the rear door from the north parking lot. For more information or to register, call the Ellis County Extension Office at 785-628-9430. A minimum attendance is required to hold each program.
Linda K. Beech is Ellis County Extension Agent for Family and Consumer Sciences.