If you believe the stereotypes, you get better at saving money as you earn more money. But here’s the dirty secret: The upper middle class sucks at saving, too. A new survey from GOBankingRates found that 69% of Americans have less than $1000 in savings–and that richer respondents aren’t the best at putting away savings either. According to the survey, more than a third of respondents making over $100,000 a year have less than $1000 in savings.
But here’s the problem: You need money stashed away in the bank (or somewhere else that’s easily accessible) for when life throws weird things like unemployment, health issues, or random curveballs at you. A lot of Americans, however, are really bad at that.
Why The Upper Middle Class Sucks At Savings
Over in New York magazine’s Science of Us blog, writer Drake Baer has a pretty good idea of why six-figure earning respondents weren’t saving away the (large amounts of!) money they were earning. Baer spoke with Megan Ford, a practicing financial therapist at the University of Georgia, and the current president of the Financial Therapy Association. Ford had something interesting to share: We live in a spending-oriented culture where there’s a lot of shame about money, and in a country where there’s a student loan crisis. In other words, there’s a perfect storm in America of over-spending and under-saving.
Here’s something from the New York article that I found especially interesting:
“Many people are still very shamed by talking about money, and feel uncomfortable, even within intimate relationships,” Ford says, and she sees it in her own practice. “I’m always surprised by how little couples know, even right before entering into marriage — they don’t even know how much the other makes as their annual salary just a couple months before their wedding date.” And because it’s such a taboo, it’s not communicated well within families, in romantic relationships, and among friends.
That shame asserts itself not just interpersonally, but intrapersonally. Avoidance coping — where you just drive something that makes you feel uncomfortable from your mind rather than face it — is all over the place with finances. “Many of us who end up being high earners, our society doesn’t do a good job of educating us about finances and financial management,” she says, so a certain amount of people don’t know the first thing about personal finance, which is an acquired skill. “They don’t know where they should start or where to get started, and when you lack that financial literacy, psychologically you tend to avoid it,” she says. “If you don’t have a solid plan or someone helping out, you just end up letting it pass you you by.”
As I read that, I thought “Hey! That sounds like a lot of people I know!” You probably did, too.
This also shows up in everyday life. As we earn more money (or work, as many freelancers do, in high-prestige but low-paying industries like media or fashion), there’s pressure to live a certain lifestyle or spend money on certain things. The idea that we can’t afford them, and are just punting them onto a credit card so we can pay a lot more money later to enjoy the things today, just doesn’t come into account.
We’re All Bad At Saving Money
The GoBankingRates survey (which, needless to say, comes from a company with a vested interest in financial education!) found that a lack of savings is common across income groups and other demographics. Although there were some bright spots–for instance, 15% of respondents have over $10,000 more in a savings account, and that 37% of senior have $1,000 or more set aside–a lot of Americans simply don’t save.
Getting Less Sucky At Saving Is Easy
The good news is that it’s easy to start saving more. A big part of this is simply doing a little self-accounting, and figuring out both the financial behaviors you grew up around (How did your parents spend money? What did you do when you got credit cards for the first time?) and thinking about the things that you really want to save money for. This could be putting money away for a rainy day or thinking about something special like a vacation, wedding, or new car.
There are also plenty of sites like Almost Millions which help with learning about money–and lots of other places to become a money champ and make sure you’ll be debt free and enjoying an amazing life for years to come.