It turns out that college students are no longer the only stereotypical Americans subsisting on $5 Hot-N-Ready pizzas and a perpetually dwindling savings account.
According to a new survey conducted by personal finance site GOBankingRates.com, approximately 62 percent of Americans have less than $1,000 in their savings account, and 21 percent don’t have a savings account at all. This may be the one thing we have in common with baby boomers.
This sentiment was echoed by a similar survey from Bankrate.com, which found that 62 percent of Americans had no emergency savings. Their plan? Approximately 26 percent would reduce spending elsewhere to pay for the damage, 16 percent would borrow from a family or friend and 12 percent would simply pay using a credit card. I guess we’re not the only generation in need of Personal Finance 101.
What’s more depressing is the fact that over half of respondents in a U.S. Federal Reserve survey released last year used “some or all” of their savings during the recession. A show of hands for who would like to replace “the recession” with “college”? Heard that.
A Rude Awakening
Of the respondents aged 18 to 34 — the “millennial” generation — a cool 24 percent had zero money in their savings account, 10 percent had just the minimum balance required and approximately 17 percent had less than $1,000. Thanks a lot, record-setting student loan debt, stagnant wages and rising rent costs!
To put this in perspective (and to scare you into saving more than one dollar per paycheck), having $1,000 or less in your savings account means you’d be unable to dig yourself out of the following “emergency” situations often experienced in your twenties:
1. Getting Kicked Out of Your Apartment
Should you get kicked out of your New York City apartment for no apparent reason, you won’t be able to cover the insanely expensive broker fee for your new apartment. (True life: My experience with apartments in New York City.)
2. Bailing your Friend out of Jail
One drink turned into seven and your best friends decided to take it upon themselves to sneak onto the roof of a Barnes & Noble. One hour later, they’re stuck in the drunk tank for the night and your broke ass is taking home the “worst friend of the year” award. Face palm.
3. Attending a Life Changing Musical Event
Some time between age 22 and 29, what I like to call a “festival-related emergency” will occur. Instead of jumping at the opportunity to finally go to Burning Man or Glastonbury, you’ll be mourning the loss of youth as you know it while kicking yourself for spending all your money on twice-daily Chipotle burritos.
4. Taking a “Travel Break”
Similar to the festival-related emergency, there will be a point in your twenties when you’re so fed up with “real life” that you’re tempted to quit your job and travel abroad for an undefined amount of time. You’re feeling spontaneous – that is, until your savings account tells you to calm the f*ck down and go to work.
5. Buying Adult Things You Never Accounted For
You just moved into your first one-bedroom apartment. Being the responsible adult that you are, you budget for your monthly expenses, accounting for every cent of your paycheck. Suddenly, it dawns on you – you forgot to budget for paper towel and toilet paper for the entire year. Before you know it, you’re $1,000 in the hole and you wish you never moved out.
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