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Most American workers would have difficulty paying for an unexpected expense. Read on to find out how to boost your savings.
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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 4.50% APY with direct depositDiscover Online Savings (Member FDIC): 4.30% APYAmerican Express National Bank (Member FDIC): 4.25% 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.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.American Express is an advertising partner of The Ascent, a Motley Fool company. Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
