High cost of living steals low salaries, leaving nothing for savings.
Americans can’t save because living is too costly.
More than half of Americans have less than $1,000 tucked away, and that’s because most of their money goes to paying housing costs, GOBankingRates says. Nearly one-third of Americans (28 percent) say it’s too hard for them to save money due to high costs of living, including rent, food, and utilities.
Not saving enough money is a huge strain on Americans — not just financially, but also mentally. More than one-third (36 percent) say a lack of saving was their biggest financial regret of 2017. But they can’t save enough because they don’t have enough. Another 20 percent credit their low salaries as the reason they can’t save any extra money.
A surprising number of people admit they simply don’t save because they don’t budget: 15 percent. Another 6 percent admit they don’t have a savings account at all. Listen to the baby boomers and never stop saving.
Fixed costs are the biggest problem
Cost of living continues to rise dramatically. While it depends on where you live, most places around the country are charging more to live than they were a year ago, and in many places that happens year after year. Meanwhile, also year after year, pay hasn’t gone up at the same rate that the cost of living has.
“Wages haven’t grown as fast, so many Americans truly might be struggling to cover basic living costs — such as food, housing, utilities, clothing, and transportation — which means having little to no money left for savings,” GOBankingRates says.
For a one-bedroom apartment in a city, the study estimates it costs a person almost $1,200 a month. Utilities are roughly another $150, while the internet can run around $57. This doesn’t include any sort of food, transportation, or clothing expenses.
While home values have gotten fire-hot in the last year, average hourly earnings have gone up 0.2 percent in the last year, while consumer prices have risen 2.2 percent. It’s expensive everywhere, but some places are pricier than others.
In Miami, for example, the median income is $31,051, while residents would need to make $75,891 to live comfortably. Why people aren’t saving money varies by state, too. In Florida, the high cost of living is why residents can’t save. But in Missouri, a low salary and not having a budget is the hold-up there.
GOBankingRates says women are more likely to give cost of living as a response: 32 percent vs. 25 percent of men. Women also credit debt more than men, while more men say not having a budget is a major factor (16 percent of men vs. less than 14 percent of women).
The study suggests that if you can, work toward making more money to ensure you can cover your costs of living and debt, along with having something left over to stash away. If you can’t do that, just make a budget. Once you see where every dollar goes, it’ll be easier for you to limit unnecessary spending.
“Using a budget to track your cash flow can help you pinpoint unnecessary expenses you can reduce or eliminate to free up more cash to save,” the study says. “Add up those costs you can cut, and then have that amount automatically transferred to a savings account or retirement account as soon as you get paid — before you have a chance to spend that money.”
Meet the Author
Article last modified on September 12, 2018 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Saving Money Is Hard When You Don't Have Extra to Stash Away - AMP.