By Tony Wittkowski | Business Reporter | The Herald-Palladium
ST. JOSEPH — Trying to save money is a struggle, especially when the biggest challenge is sticking to a budget.
GOBankingRates.com conducted a survey to see how well Americans are saving money that doesn’t go toward retirement or their checking accounts.
While 51.3 percent have at least something in savings, the survey findings reveal most Americans’ savings account balances are falling short of where they should be.
The survey shows 62 percent of Americans have less than $1,000 in their savings accounts, and a third of those under-savers have no savings account at all. The portion of savers with balances more than $1,000 is 29.1 percent.
Randy Reimers, Fifth Third Bank community president in Southwest Michigan, said the recommended amount to have in one’s savings account is three to six months’ worth of bills.
That is an ideal number to keep anyone afloat if they were to lose their job, Reimers said.
“I see saving balances that are used for day-to-day emergencies being used less because their money is being put in higher rate of return investment accounts,” Reimers said.
Numbers not all bad
For those who have something in their savings accounts, 14.2 percent said they have $10,000 or more – a sign of financial health for those savers. This amount is followed by 5 percent who have saved between $5,000 and $9,999, 9.9 percent who have saved $1,000 to $4,999, and 13 percent who have less than $1,000 in savings.
Another 9.2 percent said they keep just enough money in their savings accounts to meet the minimum balance requirements – something depositors do to avoid maintenance fees.
Honor Credit Union public relations manager Kaylee Williams said these numbers are different from years past.
“Spending habits and expenses have absolutely changed over the last decade, so savings habits have likely changed as well,” she said. “There are so many factors, like the state of the economy and inflation, that affect a family’s financial scenario, including the amount they are able to put away into savings each month.”
Does age matter?
The survey shows some correlation between the balances of Americans’ savings accounts and their ages.
Millennials gradually get better at saving the older they get.
People surveyed between 18 and 24 years old report having a smaller savings account balance of $1 to $4,999 when compared to any other age groups. Savers between 25 and 34 follow closely behind.
While being older and presumably more experienced with money, 31 percent of Generation X – ages 35 to 54 – has a savings account balance of $0. That is the highest number of all age groups. Only 16 percent of Gen Xers report having savings of $10,000 or more.
Baby boomers – ages 55 to 64 – and seniors – 65 and up – have the most money saved of any age group, with a full 20 percent of those past retirement age reporting savings of $10,000 or more.
Only 7.5 percent of younger millennials have this much money saved.
Keith Weber, the program manager with United Federal Credit Union’s investment planning, said the older generations are more prepared for unexpected expenses because they have had more time to save.
“I think the older you get the closer you are to retirement and therefore the urgency to save becomes a little more pressing,” he said. “Not that it’s a generational issue, they just have a little more disposable income.”
Different age groups save in different ways, but Williams said the younger generations seem to understand the importance of saving at a younger age.
“While it’s never too late to start, the earlier you start saving the better,” Williams said. “The millennial age group does seem to be understanding this and making wise decisions for their financial future.”
Broken down by gender, men and women report not having a savings account or having nothing in their savings accounts equally.
The survey did show women are more likely to save a smaller amount of money – only slightly – selecting the answers “less than $1,000” or “just the minimum balance requirement” more often than their male counterparts.
Similar numbers of men and women report savings balances of $1,000 up to $9,999, but 60 percent more men than women report a savings balance of more than $10,000.
(Author’s Note: This article was originally published on Oct. 26, 2015)