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The American Savings Crisis: Change Needed

June 15, 2015
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How's your savings account looking right now? If you're like most people in the United States, it's likely that you're finding it difficult to build that number in your bank account up to one you can be proud of. After spending most of their paychecks on budget items, many Americans are finding that there is very little money left over to tuck into savings. Yet, a robust savings account is one of the most important components of financial well-being. Let's take a more in-depth look at this savings crisis and examine ways for households to buck the trend.

The Facts: Change Desperately Needed

When I advise clients, I always recommend they keep at least six months expenses worth of savings in their account. According to Chris Metinko of, 47% of American adults have savings that could last them for three months or less, and 34% of adults don't have any emergency savings at all. Many people simply find it hard to allocate extra money in their monthly budget to put towards savings. Even when it comes to retirement, a large amount of people are not contributing enough to their 401(k) or IRA accounts to ensure a successful retirement. They simply feel they do not have the funds available to make these allocations.

A robust savings account is essential, though. Having an emergency fund is a necessary step towards achieving financial well-being and long term protection.

Scrounging Spare Change

Many people can find small (or even large) amounts of funds to tuck away. Being creative helps. Here are a few tips:

  • One NDTV article advises adopting a cash only policy to avoid building debt that's more expensive to repay. It can also help to forego carrying credit cards in your wallet so you have to make the conscious decision to use them rather than use them at any time. Utilize debit cards instead.
  • According to Megan Elliott, personal finance writer for, 77% of employers who offer retirement plans will match contributions. That's free money you need to take advantage of when available to you. If you qualify for a matching contribution, make the most of it.
  • Invest or save as soon as money hits your account. Making your savings contributions automatic minimizes the amount of money you have in-hand to spend. This forces you to save and ensures that you are not tempted to spend the funds on something else.
  • Getting a raise this year? Instead of using those funds to buy more stuff, invest it. If you get a 2% raise, for example, you can easily put that money towards savings rather than new expenses.
  • Don't make big ticket purchases on a whim. Always wait at least a week and do a large amount of research before deciding to pay for things like a new television or a washer/dryer set. You might even find that you can forego these big ticket purchases without much negative impact to your quality of life.

A Change is Going to Come

According to an article on Bloomberg, middle-income households should have at least $4,800 tucked away as an emergency fund, and low-income individuals should have $1,600. If you are not meeting these goals, it's time to make some changes. Though it may be difficult, emergency savings can significantly reduce your need to depend on expensive credit or payday loans in emergency situations. That's critical to protecting your long term financial stability and helping you to be in a better place, both economically and psychologically!

What are you doing to build up your savings? What concerns do you have about fitting savings into your budget? Let us know by tweeting @Lindsey2Wealth!