Can’t save a lot? Don’t worry, as little as $ 100 in savings can be a big help.
Families with more than $ 100 in savings are better able to avoid expensive loans such as predatory loans and payday loans, and to retain utilities, and they are more financially satisfied than those who have saved less. , according to a December study by the FINRA Foundation. , created by the self-regulatory body of brokers to help underserved people, and SaverLife, a nonprofit focused on financial security.
Over 1,100 SaverLife members participated in the survey between February and May and were paid between $ 5 and $ 15 for their responses. The study also used account data from 687 members who had average daily savings balances over three months.
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“There is a lot of volatility in family finances in this country, especially for those with low incomes,” said Leigh Phillips, CEO of SaverLife. For many people in low-paying jobs, their expenses and paychecks may not always match, and an unforeseen event, such as a sick child or a broken down car, can trigger a significant downward spiral.
On the flip side, even keeping a small amount of cash in family finances can help people stay on track in an emergency.
The results are encouraging in light of data from the Federal Reserve showing that 37% of adults could not cover an emergency expense of $ 400 in 2019, before the coronavirus pandemic struck. While it’s still a worrying statistic, the survey showed that saving smaller amounts can prevent families from devastating events.
Only 17% of those who had saved more than $ 250 had to move for financial reasons in the past five years, compared to 29% who had less in the bank. In addition, only 19% of those who had saved more than $ 100 had their utilities shut down in the past five years because they had not paid their bills, compared to 37% with less than $ 100.
The results are especially significant amid the coronavirus pandemic, Phillips said. Economic and financial uncertainty is even higher for people with low wages, who have been more likely to face unemployment due to the Covid crisis.
“We really see how many cracks there are in our financial system and how uneven this system is,” Phillips said.
Tips for saving
For those who aren’t making a lot of money and struggling to save, Phillips recommends a few tips that can help create even a small safety net.
1. To start: “It doesn’t matter if it’s $ 5 per paycheck,” Phillips said. Setting aside even a small amount in an emergency savings account gets the ball rolling.
2. Set an achievable goal, even if it’s a small amount: For many, the traditional financial advice of having three to six months of living expenses in savings is unattainable and can be daunting, Phillips said. Having a smaller goal, like $ 100, can still be beneficial, according to the survey.