How much do you have in savings? We’ll give you a moment to think…if you can’t answer that question because you haven’t really saved very much, pay attention.
It is more difficult to save when you do not make very much money but if you think that people who live comfortably would not have an issue with building up their savings, think again. People at various income levels find it difficult to build up their savings. In an article entitled, “Skimpy Savings: Why It’s Not Just a Low-Income Problem,” LearnVest offered this startling data:
“According to a new report by the Federal Reserve, less than half of American upper-middle-class households—those making between $75,000 and $99,999 annually—saved any money whatsoever in 2012. In fact, 16% said they spent more than they earned that year—landing themselves in debt.”
Some of the households studied said that while they had at least a three month emergency fund, they would use credit cards if faced with an expense of several hundred dollars that they hadn’t budgeted for…so those with savings preferred having more debt to using their savings.
And while it may seem that fears of not having enough stemming from the recent recession would be the cause of the lack of savings, LearnVest speculates that this may not be the case. After consulting the Survey of Consumer Finances, it seems that people in that same earnings bracket did not save much prior to the recession either. Why? Perhaps they felt secure in a strong economy with readily available credit and couldn’t foresee a need to set aside money.
No matter what your reasons are for not saving, it is important to find a reason to save. You needn’t live in fear (although being without a financial safety net is frightening). Instead, you should aim for savings goals that will keep you on track and motivated to put money aside. And if you need an objective eye to look at your finances and help you pinpoint areas where you could save more, contact a Fee-Only financial advisor.