Americans Do Not Have Enough Savings. Here's What You Can Do About It

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KEY POINTS

  • Recent research suggests many Americans have too little money in savings.
  • Having insufficient savings makes you financially vulnerable.
  • You can take steps to increase your savings account balance, including cutting discretionary spending, adding a side hustle, or asking for cash gifts.

Don't just accept a low savings account balance as your fate.

Having money in a savings account can be very important. It can protect you from credit card debt in case unexpected costs crop up. And it can ensure you have money to pay the bills in case of a temporary income interruption.

Unfortunately, many Americans have too little saved. If you are one of them, you can take steps to improve your situation so you have the security you deserve. These tips will help.

Americans are falling short on the savings front

According to The State Of Personal Finance In America 2022, a study conducted by Ramsey Solutions, there's a clear shortfall in personal savings among millions of Americans.

The survey revealed that 36% of all Americans have absolutely no savings at all, and another 19% have less than $1,000 saved. Just 45% of all Americans have $1,000 or more in savings.

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These were the savings account balances as of the third quarter of 2022. They reflect the fact that while Americans were able to build up more savings during the COVID-19 pandemic, account balances have substantially declined thanks to inflation causing the price of necessities to rise.

Unfortunately, with so many Americans having so little saved, it's not surprising that the same survey revealed 18% of Americans ended up taking on more consumer debt since June of 2022 and 25% are relying on credit cards to pay the bills more than ever.

How can you increase your savings?

Ideally, you should have three to six months of expenses saved in a high-yield savings account to help you cover costs if you get sick or lose your job or if something else unexpected happens. For the millions of Americans with less than $1,000 saved, they aren't even close to that milestone.

Not having savings can leave you at serious risk of financial disaster, so it's important to prioritize putting some money in the bank -- even if that means you may have to pause on paying extra toward debt or accomplishing other financial goals like investing.

You shouldn't necessarily pause on extra debt paydown for the entire time it would take to save up several months of living expenses, but should aim to get at least a $1,000 mini emergency fund saved up before doing anything else.

While it may seem difficult to save more during a time when prices are so high, there are some steps you can take to help make it happen:

  • Go through your budget carefully and cut expenses dramatically on a temporary basis. While you may not want to make big sacrifices forever, you can cut out a lot of discretionary spending for a short period of time to save your $1,000 mini emergency fund to get you started.
  • Look for fixed costs you can cut. If you move to a cheaper apartment, get a less expensive car, or cancel monthly subscriptions, this can free up money to save. These changes can be easier to sustain since you only have to make them one time.
  • Ask for cash gifts. With the holidays coming up, ask friends and loved ones for cash or cash equivalent gifts (like gas or grocery store gift cards) instead of more stuff. You can deposit this money directly into savings.
  • Consider getting a side gig. If you can pick up even a few extra work hours per week, you can put that money right into savings.

By putting in some extra effort and taking a close look at your financial life, hopefully you can build your account balance up to a level you feel comfortable with that also provides the security you deserve.

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Two of our top online savings account picks:

Rates as of Jun 15, 2024 Ratings Methodology
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APY: up to 4.60%

APY: 4.25%

Min. to earn APY: $0

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