The myth that Americans do not save is not entirely false. While people may ascribe to saving some percentage of their income, there has been a regular decline in saving habits, with people spending more of their money and saving just too little. The essence of these savings is not just to buy luxuries but to plan for retirement and old age. Years of investigation have proven that Americans struggle seriously when it comes to savings.
This situation remains unchanged in 2020. A survey by GoBankingRates in 2017 revealed that more than 50% of American adults had less than one thousand dollars in their savings account. The Federal Reserve Board also revealed in its 2019 annual report that the vulnerability of not saving enough continue to plague more than half of adult Americans. This has led to research by psychologists, who identified reasons for such problems; the most notorious being the unwillingness to delay personal gratification to achieve a future gain, despite having the capacity to do it.
However, the problem is not limited to self-control. The complexity of volatile cash flows leads to drawing from past savings to cover present expenditure. This makes it difficult for an individual to plan for savings effectively. However, some people can afford to save but are not saving for a variety of reasons. These set of individuals should figure out why. Some reasons include
- Procrastination: individual often affirms their capability to save when they get higher income. However, when this happens, they still find it hard to save, perceiving that they yet need a higher income before they can save. They forget that as income increases, spending habits often increases too.
- Credit card debt: no matter the income, individual who find themselves in massive credit card debts find it hard to save
- The Subscription Addiction: the tendency to continue subscribing for everything and anything makes it difficult to make effective savings plans.
The list of likely reason for Americans not saving is endless. However, there are ways by which individuals can adopt a healthy savings plan. This includes:
- Create a monthly budget and strictly adhering to it. Monthly budgets are a great way of planning your expenses for the period. If gives you the capacity to know how much you can spend and how much can be saved conveniently.
- Try as much as possible to keep your mind off the figures of your savings. Some people get carried away when they see the amount they saved, which often leads to complacency
- Embark on long term investments. This is a sure proof way of tying down your savings for a reasonable length of time.
- Open restricted savings accounts. These accounts have withdrawal limits aimed at reducing the capacity to engage in unlimited spending.
- Quit expensive habits. Habits such as perennial eating outs, visiting casinos, and binge drinking are part of the expenses that should ordinarily go to savings. Avoid them to improve your savings.