Survey: 40% of Americans Have Less Than $300 in Savings
According to a recent GOBankingRates survey, 40 percent of Americans have less than $300 in savings, reflecting the effects of the COVID-19 pandemic on Americans’ financial health. This data is significantly less than the $400 figure that the Federal Reserve uses to measure households’ financial well-being. In the most recent Federal Reserve Report on the Economic Well-Being of U.S. Households, released in May 2021 and covering 2020, only 64 percent of Americans could cover a $400 emergency expense completely using cash or its equivalent. This means that 36 percent would need access to credit to meet unforeseen needs.
“We find that people’s financial savings can serve as a kind of litmus test for their financial well-being in general,” said Andrew Murray, content data researcher at GOBankingRates. “The 50-30-20 budgeting rule suggests people save 20 percent of their income, so when people don’t have any savings, or have to withdraw from it unexpectedly, it’s a good indicator that they are struggling financially.”
The survey found that 50 percent of Americans have less than $600 in savings, and 57.4 percent have less than $1000 in savings. In December 2019, 69 percent of Americans had less than $1000 in savings. More Americans are living paycheck-to-paycheck too, at 37.5 percent compared to 33 percent in December 2019.
Data also showed a large gender gap for the $0-$300 savings range, with 29 percent male and 45 percent female respondents. Julia O’Brien, an associate researcher at GOBankingRates, attributed that to the income gender gap: “While 43.91 percent of women reported an annual income below $30,000, only 30.27 percent of men reported an income that low,” she said.
Additionally, 63 percent of Americans said their personal finances were affected by the pandemic, with 55 percent of Americans dipping into their savings. The 25 to 34 age range was affected the most, with 64.3 percent using their savings. 12.6 percent said they had no savings at the start of the pandemic.
The survey also asked what respondents would do with another $1,400 stimulus check, with 40 percent saying they would use it to pay their bills. 20.5 percent said they would use it for other necessities, and 14 percent said they would use it to pay off debt.
