Half of Americans Struggle With Saving

Approximately 49% of Americans don't save money for this surprising reason.

Saving money is essential but millions of Americans struggle with it, for many reasons. Recent research from Northwestern Mutual revealed an especially common problem that affects people's ability to put money aside for the future.

The good news is, it's a fairly easy obstacle to overcome. If it's holding you back from saving, fix it and start working on building a much more secure future in 2021.

This is the obstacle holding millions back from saving

According to Northwestern Mutual's data, 49% of U.S. adults indicated they aren't sure how much they should spend now versus how much they should save. That means close to half of all adults don't have a clear road map for what to do with their dollars.

This has real consequences. The Northwestern Mutual data also showed that 22% of people indicated they spend their money first and hope they've saved enough. And 27% said they tend to hold back on spending.

When it comes to something as important as devoting money to your financial goals, you can't afford to be in the dark. That's especially true if your uncertainty about how much to save prevents you from putting cash aside.

So how much money should you save?

There's a few different ways to decide the amount of money you should be saving. The best way is to set specific financial goals. You can then work out how much you'll need for each one and set a timeline. Work backwards to decide on your monthly savings rate. Another way is to simply save 20% of your income.

If you want to make sure you're saving enough for your unique needs, you should take the first approach. Think about everything you want to save for, from retirement to buying a house to going on vacation to preparing for emergencies to sending your children to college. Here are some ways to calculate the amount you'll need for each goal:

• Estimate you'll need a retirement nest egg equaling 10 times your final salary
• Research homes in your area to set your price range and plan for a 20% down payment
• Price out your vacation or other large purchases
• Assume you'll need an emergency fund to cover at least three months of living expenses, preferably six months worth

Set an estimated timeline for each goal, then use the calculators available at Investors.gov to figure how much you need to save each month. Let's say you want to save $100,000 for a home down payment in five years. If you plan to keep your money in a high-yield savings account that pays 0.6% interest, you'd need to save about $1,647 per month.

Once you know the amount you need for each goal, you can build a budget around your savings targets. You might find you don't have enough income to cover the bills and save what you need. In which case, you'll either need to adjust your objectives, cut expenses, or find additional income sources.

This may seem like a lot of work, but it can help you to be as prepared as possible for the future. If you aren't ready to jump into this, you can start by planning to save around 20% or your income. Allocate 10% to 15% to retirement and the rest to other goals. That approach isn't necessarily going to ensure you'll meet your specific needs, but it's quick and simple. And it beats saving too little because you aren't certain how much to put aside. The important thing is to prioritize saving in your budget.

Know how to balance saving and spending

It may take time and careful budgeting to work up to saving 20% of your income -- or to work up to saving enough to meet each objective. But knowing how much to set aside is the first step. Hopefully with a little diligence, you won't be one of the 49% of Americans who aren't certain how to balance spending and saving.