If it seems like the more money you make, the more you end up spending, you’re not alone. A new survey shows that an increase in income doesn’t always equal a bigger bank account. In fact, the opposite appears to be true.
Financial services website GoBankingRates asked 7052 people in early August how much money they made and how much they had in their savings account, and the results are alarming. Nearly half of those who earn from $100,000 to $149,000 a year had less than $1000 in their savings account while a whopping 18% had nothing set aside at all. The numbers hardly improve with an increase in income, either. Of those earning over $150,000, 29% still had less than $1000 in their savings account.
“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,” said financial planner Michael Hardy in response to the study’s findings.
To make sense of these startling statistics, Drake Baer of New York Magazine’s Science of Us spoke with Megan Ford, M.S., LMFT (licensed marriage and family therapist), a practicing financial therapist at the University of Georgia and the president of the Financial Therapy Association. In addition to staggering student loans that follow young professionals well into their careers, Ford cited two main factors for making it difficult for people to save: a “spendy culture” and society’s “shame around money.”
Of this first factor keeping us from saving, Ford notes that it’s highly driven by societal expectations. As we earn more, we feel pressured to broadcast our material progress. It’s a “challenge of keeping up with those around us and having this projection of ‘Look at how great I’m doing,’” says Ford. The practice of communicating success via consumption encourages people to spend close to what they earn, leaving little to nothing for savings.
The second factor Ford identifies has to do with society’s discomfort surrounding money. “Many people are still very shamed by talking about money, and feel uncomfortable, even within intimate relationships,” Ford reports. This reluctance to discuss money with others in turn causes us to drive the subject out of our own minds, inhibiting financial literacy and healthy financial management.
For those looking to become more financially empowered, Ford recommends reframing the idea of saving. Instead of seeing it as limiting or denying yourself, think about it as paying your future self and funding your future.
Have some successful strategies for saving money? Share your advice with us.