According to an official study, 57 percent of Americans have less than $1,000 in their savings account. Additionally, 39 percent of Americans don’t have any savings at all. Evidently, these statistics are a tad troubling, considering that having a savings account is essential. It helps when it comes to unanticipated expenses and emergencies.
What are the five most common reasons why some people find it so difficult to save money? Let’s find out!
Surprise Medical Bills
There are times when you have health problems; hence, you have to deal with unexpected medical bills that can be quite pricey. It all depends on your insurance coverage. Health problems can have many causes; however, when they occur, you need to address them right away. And in order to do that, you need financial resources.
That’s why having a savings account could actually help. If you don’t have that in case of emergencies, you’ll need to apply for a loan, which will increase the amount of debt you owe. In fact, up to 27 million Americans use credit cards to cover their medical bills; this costs them no less than $471 in interest a year.
Too Much Debt
Another top reason why many people find it impossible to put money aside is the amount of debt they have. For instance, the Americans’ total credit card debt has increased in 2017 with approximately 8 percent, reaching $905 billion.
Apparently, credit card debt is the most serious concern, followed by residential mortgages, personal lines of credit, household debt, student loans, and the list may go on.
When you’re in such profound debt, managing to save money seems to be an unattainable purpose, making it difficult to cope with everything that comes your way.
Truth be told, the costs of being in debt are excruciatingly high. In fact, most people who had considerable credit card debt outlined that if they didn’t have to pay that debt off, they would have managed to save money for emergencies or to pay down other debt.
High Living Costs
According to official information, living costs have increased. Over the past decade, food prices have grown by 22 percent, whereas medical expenses have increased by 34 percent. While the incomes have registered a consistent growth, as well, four spending categories have experienced an unprecedented increase, namely medical expenses, food and beverages, other expenses and housing.
If we consider the high costs associated with living in certain areas, it can be rather challenging for people to make a living without being in debt, let alone manage to save money.
Having a Consumption Attitude
While the aspects mentioned beforehand are worth taking into account, they aren’t the only reasons why many Americans don’t have a savings account. Many people consider that the high living costs determine them to accumulate debt. Other “culprits” could be the bouts of unemployment.
Surprisingly, though, a survey outlines that 41 percent of people spend more than they can afford on things they don’t necessarily need.
Oddly enough, the reasons we listed beforehand come afterward. To be frank, we live in a society that encourages reckless spending. We don’t think of the consequences of our financial decisions, and we end up spending money we don’t have. So, the fact that we live in a consumption society may also prevent people from saving money.
No Spending Budget
When you don’t have a spending budget, you are imminently tempted to spend on this and that, without necessarily needing anything. A realistic budget can help anyone to manage their finances; it’s useful even if you’re dealing with serious debt. That can help you realize where your money is going to. It forces you to face your fears and acknowledge that you need to change your spending habits.
Should People Save More Money Than They Do
The evident answer to this question is yes. Alternatively, some people might stop saving to focus on paying down their outstanding debt – which could be an efficient strategy, as long as you have a goal set in mind.
As a result, it’s up to you to analyze your financial situation, prioritize and take the steps you should in order to attain financial stability. Take small steps, and try to free up money that you can use for debt payments or save for unanticipated events.