Are People Saving Less or Is There Less to Save?

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Here’s another interesting post from our friends at xoJane:

Are you among the 28%? Of Americans who don’t have any savings, that is? Bankrate.com released a survey last week with some rather grim statistics on the state of savings in the United States.

Last year, the same survey revealed that 24% of respondents didn’t have any kind of safety cushion available. The fact that this has jumped by 4% is pretty disturbing; especially in light of the economic boosterism suggesting the US is in recovery. While someone may be recovering, it’s not the middle and lower classes, who appear even more tightly pinched than ever before. They’re still better off than in 2006 when these numbers were even worse, and people who were living high in an economic boom assumed they didn’t need savings, but they’re not where they should be.

Having no savings means living from paycheck to paycheck, carefully counting out and calculating every penny spent. It also means having nothing available for emergencies. There are no contingency funds if your car breaks down, your cat needs to go to the vet, you suddenly require medical attention, your electric bill is bigger than you expected. Every month, you’re living on the edge, balancing your bills to see how long they can remain unpaid before your utilities get turned off or you get evicted. It’s not a fun way to live.

The same study noted that almost 50% of people don’t have enough to cover three months of expenses, which is the recommended minimum for savings, idea being that in a crisis, it would be a mighty fine thing to be able to cover the costs of living for three months. If, say, you’re fired or your hours are radically cut at work, or if you’re suddenly injured or ill. Last year, closer to 46% were lacking the necessary savings.

The issue here is not that people are saving less money. It’s that there is less money to save. 

 Now, this was a study involving 1,000 people, which is a small sample size. While I’m getting a bit doom and gloomy here, and so are a lot of media reporting on the story, the situation is a bit more complicated. We really need more data to draw firm conclusions about how many people are saving and how much they are saving–in the comments here alone, I’m willing to bet we will get varying reports on savings habits, and that’s from a small, self-selected sample of xoJane readers who also read this article who also felt moved to comment.

But there are some underlying things to be concerned about, because the shrinkage in savings is definitely happening, and it means fewer people are prepared for emergencies, and more may be forced to rely on public assistance, credit cards, alternative financing or pleas to friends and family. Some of these things are going to put them at risk in the future; alternative financing, for example, is a great way to take out loans at high interest that will come back to bite you in the butt later.

And people are being told it’s “just a matter of getting into the habit” if they want to build up their savings.

Right. Just a matter of getting into the habit. I’d like to see people tell that to those who are struggling to make it, who go a week or more without any money every month because they can’t stretch their funds that far. It’s not because they’re careless and can’t handle money. It’s because they aren’t making enough to survive and the bills are racking up. That’s especially true with young college graduates, many of whom are struggling with massive student loan debt; debt they were assured would pay off as an investment in the future, but debt that is also making it really hard for them to function economically.

Pay is not keeping pace with the cost of living in the United States, and that’s especially true for minorities, who are not making as much on the dollar as nondisabled white men. More and more wealth is concentrating at the top, with less going to individual workers, and that means those workers can’t save. Yet, they’re the ones being yelled at for not saving when a better question might be why they don’t have any money to put in savings.

This is a country where it’s entirely legal to pay disabled workers, youths and employees in certain categories far less than minimum wage. It’s also one where, in most regions, working 40 hours a week at minimum wage would not provide enough income to meet living expenses. 7.7% of people in the US don’t even have bank accounts. And it’s a place with an unemployment rate hovering at around 8%.

In discussions about why people aren’t saving in the United States, a larger conversation about capitalism, wages, work, and value needs to be occurring. Because the issue here isn’t that people are reckless with money, but rather that we have an inequality problem.

And the other takeaway? If you’ve got it, save it. Or you too could be among the 28% someday.

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