Slightly goes a great distance: solely $ 100 financial savings may help households keep afloat
Can’t you save a lot? Don’t worry – savings of just $ 100 can go a long way.
According to a December study by the FINRA Foundation, families with savings greater than $ 100 are better able to avoid and maintain supplies like expensive loans like robbery and payday loans. Financially happier than families with fewer savings SaverLife, a nonprofit focused on financial security, was founded by the realtor self-regulatory organization to help the underserved.
More than 1,100 SaverLife members took the survey between February and May and were rewarded between $ 5 and $ 15 for their responses. The study also used account information from 687 members who had an average daily savings of three months.
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“Family finances in this country are very volatile, especially for low-income people,” said Leigh Phillips, CEO of SaverLife. For many low-paid jobs, their expenses and paychecks may not always match, and an unexpected event – like a sick child or a broken car – can start a significant downward spiral.
On the other hand, even maintaining low liquidity in family finances can help keep people on the right track in an emergency.
The results are encouraging given data from the Federal Reserve showing that 37% of adults were unable to cover $ 400 in emergency expenses in 2019 prior to the coronavirus pandemic outbreak. While this is still a worrying statistic, the survey has shown that smaller savings can save families from disastrous events.
Only 17% of those with more than $ 250 in savings had financial reasons to move in the past five years, compared to 29% who had less in the bank. In addition, only 19% of those who saved more than $ 100 had shut their utilities off because they hadn’t paid bills in the past five years, up from 37% with less than $ 100.
The results are especially important amid the coronavirus pandemic, Phillips said. Economic and financial uncertainty is even greater for low-wage workers, who are more likely to be unemployed due to the Covid crisis.
“We really see how many cracks there are in our financial system and how unequal that system is,” said Phillips.
Tips on saving
For those who may not be making a lot of money and struggling to save, there are a few tips Phillips recommends to help you build a small safety net yourself.
1. Just start: “It doesn’t matter if it’s $ 5 a paycheck,” Phillips said. When you set aside even a small amount in an emergency savings account, the ball gets rolling.
2. Set yourself an achievable goal, even if it’s a small amount: For many, the traditional financial recommendation of having three to six months of living in savings is out of reach and can be daunting, Phillips said. A smaller goal like $ 100 can still be beneficial, according to the survey.