Even $100 in Savings Can Make a Massive Difference, Study Shows

A row of $100 bills stacked on one another

Financial experts and advisors have plenty of different suggestions on how much money you should be saving. For many Americans, these projections range from the optimistic to the downright impossible. The idea of putting 30 percent of your paycheck into savings may sound great, but it’s not a reality for the nearly 80 percent of Americans who live paycheck to paycheck.

According to a study from FINRA and SaverLife, one of the best indicators of financial stability for lower-income families is whether they have at least $100 saved.

While we’d all love strong savings accounts with money for emergencies, expenses, and investing, the study indicated that roughly 40 percent of Americans have less than $400 saved.

For those struggling to save, just a few dollars can make a major difference.

Savings: A Little Can Make A Big Difference

FINRA and SaverLife published the results of their joint study in December after studying the saving habits of 687 families for three months. Overall, the study found major differences between those with less than $100 saved and those with more.

For instance, 37 percent of those with less than $100 had their utilities cut off at least once in the last five years. Only 19 percent of people with $100+ saved lost utilities, and there was little difference between those with $100, $500, or $1,000 saved.

The study also found that having savings of $100 or more decreases the odds that you’ll take out high-cost loans and massively increases the chance that you feel “financially satisfied.”

Housing security, too, is linked to relatively minor changes in savings. Thirty percent of those with under $250 saved reported needing to move because of financial struggles, while just 19 percent of those with more saved said the same.

“This new study underscores the need for innovative, low-barrier savings products that help financially struggling households build and maintain savings,” FINRA Foundation President Gerri Walsh said in a statement. “We now know that even a very modest savings cushion correlates with significant life improvements.”

The results aren’t necessarily surprising – those with more money saved will probably have fewer financial issues. However, the report really highlights how vital even small amounts of saving can be, as even a few dollars can provide significantly more financial relief.

The Bottom Line

The most important takeaway from this study is that when it comes to saving, even a little bit goes a long way. The study recommended that organizations encourage saving whenever possible, even on small scales.

“Many financial education programs equate adequate emergency savings with three months of living expenses,” the study said. “That guidance may work for some people, but isn’t always achievable for low-income households. This study suggests that even a very modest savings cushion correlates with major life improvements.”

To see the full study and results for yourself, click here.

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