A fifth of Americans say they have zero savings

bank vault

  • About one-fifth of Americans don’t have any savings,
    according to a new survey.
  • The personal savings rate in the US has fallen since
    the 1980s, prior to which it routinely held in the double
    digits.
  • Savings have improved in recent years, but some
    Americans have said they would still have trouble paying for an
    unexpected $400 expense like a car repair.

About a fifth of Americans have no money tucked away for
unexpected costs. 

About 21% of working Americans said they aren’t saving any
money at all, Bankrate found in a survey. Among those who are
saving, a majority are putting away less than 10% of their
income.

Over the past several decades, household savings in the US have
been trending downward. By the Bureau of Labor Statistics’ measure,
Americans were saving 7.6% of disposable income in December. Before
the 1980s, that rate had mostly been in the double digits. 

Screen Shot 2019 03 12 at 1.10.53 PM

Widening inequality has been one potential reason the personal
savings rate has remained low by historical standards and compared
with other countries, said Brian Rose, the senior Americas
economist at UBS Wealth Management.

“Among lower income households, they’re mostly living paycheck
to paycheck and even struggling to do that,” he said. “So, they
have no leeway in their finances.”

While households have become increasingly prepared for
unexpected expenses in recent years, according to a recent Federal
Reserve
survey
, four in 10 Americans say they would have trouble
covering a $400 expense like a car repair or fixing a broken
appliance.

That doesn’t mean Americans aren’t trying to save, according to
Jonathan Morduch, an economist at New York University and a
coauthor of “The
Financial Diaries
,” a book detailing a study of the spending
habits of 235 households over a year.

“The evidence we see is that households are often saving and
then spending that down,” he said. “So, when a fifth of Americans
say they don’t have any savings, it means they don’t have any
long-term savings.”

That could be in part because Americans are struggling to pay
off loans, with about 13% in the Bankrate survey citing debt as a
reason they can’t save. From car loans to tuition, Americans have
increasingly struggled to make payments on the country’s $4
trillion of consumer debt.

“How much does growing debt have to do with it?” Morduch said.
“The answer is a lot.”

In coming months, a lack of savings could become more serious
for Americans. Economists widely expect growth to slow over the
next two years, while some even expect the US to enter a recession
by 2020. 

“It’s clear that not everyone has benefited from the economic
expansion,” said Ryan Sweet, an economist at Moody’s Analytics,
said of the Bankrate savings survey. “Also, it shows we are not
ready for the next recession.”

Screen Shot 2019 03 12 at 1.12.00 PM

SEE ALSO: Americans
are struggling with their credit card debts, and 2 million accounts
fell seriously behind in 2018


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Source: FS – All – Economy – News
A fifth of Americans say they have zero savings