NEW YORK — If you’re worried that you’re getting older and you still don’t have your finances in order, don’t worry, you may still have time! A new survey finds the average American doesn’t experience a “financial awakening” until the age of 33.
The study of 2,000 Americans reveals that this so-called financial awakening can come in many forms. The most common is a sudden drop in income caused by the loss of a job or reduction in hours. More than one in five people (23%) say they’ve experienced this. Many respondents also point to the COVID-19 pandemic as the cause.
Other common triggers include “health events” which are accompanied by a loss of income or increased expenses (18%). Some admit they even have had “a recognition of the impact of my own spending or savings behavior” (15%).
The OnePoll survey, commissioned by BOK Financial, also reveals that when it comes to putting money away for future needs (like retirement), survey respondents stash away nine percent of their annual salary. This of course is less than half of the oft-cited rule of thumb of 20 percent.
To spend or to save your hard-earned money?
When asked about non-retirement savings, 63 percent indicate they are not saving at all or they end up spending what they do save on unexpected expenses. Twenty-three percent say they don’t make contributions to a savings or investment account because there’s not enough money after expenses.
The average respondent would like to retire by age 57, but one in five haven’t even started saving for it. Moreover, 22 percent say that while they previously contributed to a retirement account, they are currently unable to do so.
More than four in 10 people (43%) say they’re even “afraid” to look at their checking or savings account balance. One in five Americans watch their checking account balance closely because they worry it will hit $0.00 before their next payday.
“It is normal to feel anxious when you sense a lack of control, as happens when there is an event that negatively impacts your finances,” says Kimberly Bridges, director of financial planning at BOK Financial, in a statement. “Creating financial security starts with living within your means, building an emergency fund for unforeseen events, and creating a financial plan to get you on track to achieving your long-term goals.”
“In most places across the country, we don’t have mandatory financial literacy programs for our kids,” Bridges adds. “But one thing everyone should know is that the sooner you can start saving, the better your financial trajectory will be. Greater levels of wealth and financial security can be achieved by starting earlier than by saving more in later years.”