The State of American Bank Balances in 2024
Americans are feeling a lot of financial stress these days. Even though inflation is stabilizing, the prices for many everyday items are still high, and interest rates are making mortgage and car payments more expensive. As a result, many people are living paycheck to paycheck.
A recent survey by GOBankingRates found that 49% of Americans live paycheck to paycheck all year round, and another 22% do so at least part of the year. This financial strain is making it hard for people to save money and build wealth.
To get a clearer picture of how the current economy is affecting people’s finances, GOBankingRates surveyed over 1,000 Americans aged 18 and older from across the country. The findings were quite concerning.
Key Findings:
– The largest group of those surveyed (38%) have $100 or less in their checking accounts.
– Half of Americans have less than $500 in savings, with 36% having $100 or less.
– Women generally have less money in the bank compared to men.
Overdraft Struggles:
With so many Americans having low checking account balances, it’s not surprising that many have overdrafted their accounts. The survey found that 28% of Americans have had an overdraft in the past year, with 6% saying it happens often.
Millennials are the most likely to overdraft, with 33% of those aged 25 to 34 and 34% of those aged 35 to 44 reporting overdrafts in the past year. Those in the 25-34 age group are most likely to say it happens frequently.
Americans aged 65 and older are the least likely to overdraft, with just 19% experiencing it in the past year. Within this age group, 66% said they had no concerns about overdrafts over the past year.
How Much Should You Have in Your Savings and Checking Accounts?
The amount of money you should keep in your savings and checking accounts varies from person to person. Seth Diener, a private wealth manager, advises assessing your expenses, income stability, and risk tolerance to determine how much you should keep easily accessible.
While the exact amounts will differ for everyone, $100 is likely not enough. Diener suggests having three to six months of living expenses in a savings account for emergencies. This can help cover unexpected costs without going into debt. If you have less than three months of expenses saved, focus on building up your emergency fund with small, regular contributions.
For your checking account, aim to keep one to two months of living expenses as a buffer. This can help you avoid overdraft fees and the need to frequently transfer money from savings.
Methodology:
GOBankingRates surveyed 1,063 Americans aged 18 and older from across the country between Nov. 27 and Nov. 29, 2023. The survey included 22 questions covering topics like current financial institutions, reasons for considering a bank change, important features when opening a new account, satisfaction with current banking services, and overdraft experiences. The survey was conducted using PureSpectrum’s platform.