Over one-third of employees earning $100,000 or more live paycheck to paycheck.
There's a lot of conflicting information out there about how well Americans are doing financially. On the one hand, recent job growth data shows the U.S. added 187,000 jobs in August, and the unemployment rate, although slightly higher than the previous month, is still at a relatively low 3.8%.
But there is also data indicating that Americans are struggling with their personal finances. One of the latest examples of this comes from a report from SecureSave, an emergency savings startup, that showed that 63% of employees can't cover an unexpected $500 expense.
Here's what's happening with American workers' emergency savings right now and a few tips for how to jump-start your savings if your account has run dry.
Employees can't find $500
Financial emergencies are scary because they can happen at any time. When a car breaks down, a heat pump stops working, or a pet gets sick, most Americans tap into their savings or reach for a credit card to cover the expense.
Unfortunately, financial emergencies are pretty common. The SecureSave report showed that one in three workers experienced such an event over the last six months.
While a one-time $500 expense would be burdensome for most Americans, their financial picture looks even worse when you consider that 76% of respondents said they lack enough savings to cover a month's worth of expenses. Generally speaking, most experts recommend having at least three months' worth of expenses in a savings account.
And it's not just employees with lower salaries who are struggling to cover a financial emergency. The survey showed that 35% of employees earning over $100,000 annually live paycheck to paycheck.
How to boost your emergency savings
According to the report, many people would have to turn to other sources besides their savings accounts in an emergency, with 19% saying they'd ask family for help and 18% indicating they'd put the expense on a credit card.
RELATED: Emergency Fund Calculator
If you need help jumpstarting your savings, there are a few steps you can take. First, remember that it's perfectly acceptable to start small. SecureSave says its users save an average of $98 per month in their accounts. But if you can only save $25 or $50 per month, that's still a good start.
Begin with a goal of having $500 in savings, and look at your monthly budget to see if there's anything you're currently spending money on that you don't need. Or, if you find it easier to make a little extra money rather than cutting back on spending, you may want to look into a few side hustles that could boost your earnings.
And finally, it may be a good idea to look at a few offers from banks right now. Many banks are paying more interest on savings accounts, and some are also offering bonuses when you open an account. Here are just a few current offers:
- SoFi Checking and Savings (Member FDIC): Up to $250 bonus and up to 4.60%
- Discover Online Savings (Member FDIC): 4.35% APY
- American Express National Bank (Member FDIC): 4.35% APY
If you're interested in more options, view our complete list of best high-yield savings accounts here.
The important thing to remember when starting a savings account from scratch is not to get discouraged. Adding just $50 into a savings account can be a great way to get started, and then you can build that amount slowly over time by setting up small automatic deposits into your account. Before you know it, you'll have a few hundred dollars in your account and be much more prepared for the next rainy day.
Alert: highest cash back card we've seen now has 0% intro APR until 2025
If you're using thewrong credit or debit card, it could be costing you serious money.Our experts love this top pick,which featuresa0% intro APRfor 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.
In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.
My expertise lies in personal finance, specifically in understanding and analyzing financial data, savings strategies, and economic trends. I've delved into numerous reports, conducted comprehensive analyses of financial behaviors, and studied economic indicators to grasp the complexities of managing finances effectively.
The article you shared highlights a concerning reality: a significant portion of Americans, including those earning substantial incomes, struggle with financial stability. Several core concepts are discussed here:
-
Financial Strain Despite Employment Growth: The article mentions a growth in job numbers, signaling a seemingly positive economic outlook. However, this contrasts sharply with the fact that a substantial number of Americans, regardless of employment status, face financial insecurity.
-
Emergency Savings and Financial Preparedness: The data from SecureSave underscores the lack of emergency savings among Americans. A majority can't cover unexpected expenses, with a considerable percentage unable to handle even a $500 expense. This signifies a concerning lack of financial preparedness.
-
Income Level and Financial Vulnerability: Contrary to common assumptions, the report reveals that a significant percentage of individuals earning over $100,000 annually are also living paycheck to paycheck. This challenges the misconception that higher income automatically translates to better financial stability.
-
Strategies for Boosting Emergency Savings: The article offers valuable tips for improving savings habits, including starting small, reevaluating expenses, considering additional income sources through side hustles, and exploring higher-yield savings account options. These strategies aim to address the lack of adequate savings among individuals.
-
Financial Products and Offers: There's a mention of various banks and their offers with higher interest rates on savings accounts, along with bonuses for opening accounts. This encourages individuals to explore better savings options to grow their emergency funds more effectively.
The overall message here stresses the importance of cultivating a savings habit, irrespective of the amount. It emphasizes starting small, gradually building savings, and exploring diverse strategies to bolster financial preparedness.
Understanding these concepts and acting upon them is crucial to mitigate financial vulnerabilities and build a stronger financial future, ensuring better preparedness for unexpected expenses or emergencies.
