Despite the fact that saving money is one of the most basic and oft-repeated pieces of financial advice, a fairly large amount of American workers are not acting on the tip. It goes without saying that saving, like working out, dieting, and giving up any number of vices takes hard work and discipline, but a nest egg can provide freedom, financial security, room for risk, and an overall safety net if you or a loved one falls on hard times. With that said, more than 1 in 5 working Americans aren’t saving any money for retirement, emergencies or other financial goals, according to Bankrate’s March Financial Security Index survey. More specifically, almost half of working adults (48 percent) are saving something, but no more than 10 percent of their annual incomes. Only 1 in 6 employees (16 percent) report saving more than 15 percent of their yearly earnings.
So who is saving? Well, in a nutshell, the savers tend to be wealthier males who are over the age of 55. It goes without saying that low-income Americans have a harder time-saving money. For those who earn less than 30,000 per year, more than 4 in 10 households are not saving any money at all, most likely because they simply can’t afford to prioritize that type of budgeting over putting food on the table and paying their rent. When it comes to budgeting differences between men and women, males are “more likely than women to say they’re saving more than 15 percent of their income. About 1 in 5 males and 13 percent of females fall into that category.” Lastly, those above 55 are more likely than other age groups to be saving more than 10 percent of their annual income. It’s been widely covered that millennials are still trying to figure out how to pay their enormous amount of student loan debt, and GenXers may fall into the same boat.
The real question is how much should you save? Well, according to most financial advisors, you should transfer at least 15 percent of your income into a savings account. This rule of thumb can vary based on the goals, objectives and future needs of the savers and is sometimes better assessed as a dollar value, rather than a percentage of how much you take home. Remember, we just wrote about the percentage of American workers who live paycheck to paycheck and it was alarmingly high. If you want to break free from this cycle, think about sticking to a budget and savings plan over the course of the next three to five years and beyond.