Americans are not known for their prudent saving habits. Several factors such as stagnant wages, rising expenses, and a general lack of financial knowledge keep many people from building a significant nest egg for the long-term. However, there are plenty of reasons to get motivated and find a way to save more money.
We are currently in the middle of America Saves Week, which is an annual opportunity for organizations to promote good savings behavior and a chance for people to evaluate their personal finances. It started in 2007 and is coordinated by America Saves and American Savings Education Council. The latest survey from the two firms revealed only about one-third of Americans feel prepared for their long-term financial future, while nearly two-thirds feel they were making only “fair” or “no” progress in meeting their savings needs.
“Savings isn’t something you do once a year, or one week out of the year. However, America Saves Week gives us all a chance for a renewed focus not only on why it’s important to save, or to establish goals for saving, but the role that savings plays in helping us achieve our individual needs and goals,” said Nevin Adams, Director of the American Savings Education Council, in a press release. “America Saves Week is a great time to revisit or establish those goals — and to start saving, or start saving more.” Let’s look at three important reasons why Americans should save more money.
A survey from Ally Bank found that saving money is one of the best habits people can take to increase happiness. Among those polled with savings accounts, 38 percent of people said they felt extremely or very happy. In comparison, only 29 percent of those without savings accounts felt the same way. Overall, 84 percent of people said saving money makes them feel good — ahead of eating healthy at 74 percent and enjoying work at 68 percent.
The more you save, the more likely you are to be happy. Of those who said they felt extremely or very happy, 34 percent had less than $20,000 in savings, while 42 percent had $20,000 to $100,000 in savings. Furthermore, 57 percent who felt happy had $100,000 or more in savings. “The connection between the size of your savings account and your level of happiness may seem obvious. But here’s something that may surprise you: saving money actually affects happiness more than how much you earn, according to our survey,” explained Ally Bank.
If your dream retirement includes getting out and seeing the world, you’re not alone. Americans want to travel and seize the benefits of getting away from it all during their golden years, but most are not saving enough to make these goals a reality.
Travel ranks as one of the top two goals for retirement, coming in second only to spending time with family and friends. In fact, 59 percent of Americans dream of traveling during retirement, and 69 percent say travel is an important goal worth saving toward, according to the Transamerica Center for Retirement Studies and the Global Coalition on Aging. At the same time, only 15 percent place a high priority on retirement travel, while just 12 percent have given “a lot” of attention to saving for it.
Start saving now to avoid regrets later in life. “Retirees were asked how they would have prepared differently for travel in their retirement. Of those with regrets, more than half wish they would have saved more,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies, in a press release. “People of all ages need to plan and save to make their retirement dreams of traveling a reality.”
In case you didn’t notice, life is full of surprises. If you don’t have a savings cushion, these surprises can quickly turn into emergencies that lead to additional debt and a vicious cycle of never getting ahead.
The number of people who do not have a personal financial safety net hasn’t improved in recent years. In fact, 44 percent of American households have less than three months worth of savings, and are unable to cover an unforeseen expense without going deeper into debt, according to the Corporation for Enterprise Development. Making matters worse, the 56 percent of consumers who have subprime credit scores may turn to a predatory loan to cover a financial emergency — prolonging financial insecurity.
More From Wall St. Cheat Sheet:
- The Housing Market Continues This Losing Streak
- Obamacare Aftermath: The One Savings Tool You Need to Know About
- Is Debt Becoming the American Dream Again?
Follow Eric on Twitter @Mr_Eric_WSCS