And yet when Brobeck looked more closely at the lowest two income groups, he found something interesting: There was little difference in the incomes of those who had at least $500 saved versus those who hadn't.
- For low-income households, the median income of those who had $500 saved was $18,000, compared with $17,000 for those who had less.
- For moderate-income households, the median income of those with at least $500 in the bank was $38,000, compared with $37,000 for those who had less.
So something other than income also helps determine how much people save.
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Brobeck examined other factors that might influence savings, such as gender, education, marital status, employment, age and whether the household had children.
There were some differences. High savers were more likely to be:
- Men.
- Four or five years older than low savers.
- More educated. Education made a big difference among the low-income folks; the gap was less pronounced among the moderate income group.
- Unmarried, for moderate-income respondents. Marital status made little difference for low-income respondents.
- Without children. Children had a bigger impact on savings in the moderate income group. For low-income respondents, high savers were somewhat less likely than low savers to have kids under 18. But moderate-income high savers were much less likely than low savers to have children.
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Employment status didn't explain any differences in emergency savings for either group, Brobeck found.
So what really distinguished those who had saved at least $500 from those who hadn't? Basic savings habits: a budget, savings goals and an automatic savings plan.
| Low income | Moderate income | |||
|---|---|---|---|---|
With less than $500 saved | With more than $500 saved | With less than $500 saved | With more than $500 saved | |
Have a budget | 34% | 88% | 50% | 78% |
Have savings goals | 11% | 63% | 21% | 61% |
Have automatic savings | 12% | 54% | 16% | 46% |
The clear message here? If you want to save, make a plan, then make that plan automatic. Once you have $500 in the bank, you're on your way to a financial life that actually works.
Published March 12, 2009
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