You just got stuck with an unexpected bill for $1,000. Could you handle it?
A new survey from GoBankingRates.com suggests more than two-thirds of Americans would be in trouble since they have less than $1,000 in a savings account. That result dovetails with studies showing that entrepreneurship has declined among young adults in recent years.
According to the GoBankingRates.com survey, 34 percent of the more than 7,000 respondents said they had $0 in a savings account, while another 35 percent said they had some savings but that the amount was less than $1,000. At the other end of the spectrum, 15 percent of respondents said they had at least $10,000 in a savings account, while another 15 percent said they had between $1,000 and $9,999.
As might be expected, 18- to 24-year-olds made up the largest percentage of people with less than $1,000 in a savings account (72 percent) and the smallest percentage of people with at least $10,000 in a savings account (8 percent). But those figures weren’t that far off from older cohorts’ totals. Each of four age groups younger than 65 had between 67 percent and 70 percent reporting less than $1,000 in a savings account. About 62 percent of the respondents age 65 and older were in that same category.
Michael Hardy, a certified financial planner, was quoted in discussion of the survey’s results, saying, “It doesn’t matter if they are making $30,000 per year or $300,000 — people don’t seem to know how to spend less than they make.”
Another certified financial planner, Brandon Hayes, was quoted surmising that the popularity of social media has added pressure to young people to show that they’re doing well financially, even if they could be making more prudent decisions with their money.
All those pressures that discourage people from saving money could also be seen as discouraging entrepreneurship. In a survey earlier this year of millennial adults who were wanting to start a business, almost half of those respondents said student loan debt was a major barrier. Furthermore, a Small Business Administration study of U.S. Census Bureau data, also from earlier this year, showed that 4 percent of 30-year-olds were self-employed in 2014, a lower percentage than the 5.4 percent of Generation X members who were self-employed at age 30 and the 6.7 percent of Baby Boomers at that age.
GoBankingRates.com’s advice largely amounts to “spend less, save more,” which may ring hollow to people who feel as if there are structural reasons they can’t save more money. Alternatively, there are numerous proposals for alleviating the burden of student loan debt, including one from Democratic presidential candidate Hillary Clinton, who would defer and forgive some payments for certain entrepreneurs.
Republican presidential candidate Donald Trump has yet to speak in detail about how he would address student debt, but a representative told Inside Higher Ed in May that Trump has a plan involving shifting student loans more toward private lenders and that colleges ought to assume more of the risk of those loans.