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Middle-class families share how much they have in their savings accounts and it's eye-opening

"We make the most money we ever have and have zero savings. We live paycheck to paycheck and every month I don’t know how we get by."

Photo by Karolina Kaboompics/Pexels

Many middle class families are sharing that they have nothing in savings right now.

According to an April 2024 Gallup poll, 54% of Americans identify as part of the middle class, with 39% identifying as "middle class" and 15% identifying as "upper-middle class." That percentage has held fairly steady for years, but what it feels like to be a middle-class American has shifted for many.

Notably, inflation caused by the pandemic has hit middle-class families hard, with incomes not keeping up with cost-of-living increases. Housing costs have skyrocketed in many areas of the country, mortgage interest rates have risen to levels not seen since the pre-Obama era, and grocery bills have increased significantly. One government study found that the cost of living has increased between around $800 and $1,300 a month, depending on the state, since 2021, putting a squeeze on everyone, including the middle class.

How much money do middle-class Americans have in their savings accounts?

One woman shared that her family is just getting by and asked other middle-class people to "chime in" with what they have in their savings accounts.

@abbyy..rosee

somethings gotta give #savings #middleclass #relatable

"I swear, every paycheck I am putting money into my savings, but needing to transfer it back within a few days," shared @abbyy..rosee on TikTok. "My registration is due. My husband's registration is due. He needed two new tires, even though they had a warranty. That's $300. My oldest needs braces, he needs a palate expander, that's $120 a month. Not to mention groceries are $200 more a week. Forget about feeding your family great ingredients because who has $500 a week to spend on perfect ingredients to feed your family?"

middle class, cash, savings, family finances, dollar bills, A depressed couple doing their bills.via Canva/Photos

She explained that her husband makes enough money that they should be able to live comfortably, and that she quit her job because the cost of daycare was more than she was making.

"At some point, something has to give," she said. "What is going on? How do I save money?"

People in the comments chimed in with their savings account totals and it was quite eye-opening. Many people shared that they have $0 saved.

"We make the most money we ever have and have zero savings. We live paycheck to paycheck and every month I don’t know how we get by."

"I think the middle class is 1 personal disaster away from bankruptcy."

"Y’all got savings accounts?!?! 😂"

"I used to freak out if I had under $10k in savings, now I’m happy when I have over $150. 😫"

"We make almost 100,000 a year with no savings!!!! It's always something!!"

"I'm lucky if we have $500-$1K for an emergency. Every single time we start saving, something happens: the vet, the cars, the kids... something."

"Savings account? I transfer money each paycheck but always end up needing to transfer it back. My husband makes great money too but we are scraping by."

"$803 but we have to pay a $750 deductible this week b/c my Husband hit a deer soooo… back at it 😭 It’s exhausting. Constantly draining it, refilling it, transferring."


middle class, cash, savings, family finances, dollar bills, An upset couple doing their bills.via Canva/Photos

Some people shared that they do have some savings, but several said it was because they'd had an inheritance or other chunk of money come their way. Many people shared that their savings has dwindled as increased costs have taken their toll. Some people gave lifestyle advice to save money, but most agreed that just the basics have gotten so expensive it's harder to make ends meet much less put extra into savings.

Thankfully, the inflation issue appears to be waning, but even just plateauing at their current financial reality isn't ideal for many American families. Middle class is supposed to be a comfortable place to be—not rich, but well enough off to feel secure. That's not how many middle class folks feel, though. Most Americans don't have anything close to the amount of money saved that is recommended across the age spectrum, but at least hearing that others are in the same boat is somewhat comforting.

middle class, cash, savings, family finances, dollar bills, An upset couple doing their bills.via Canva/Photos

Further, a 2024 study found that 37% of Americans can't afford an unexpected expense over $400, and nearly a quarter of them don't have any emergency savings at all. “Not all surprises are good, and people know it. The study suggests financial precarity at a time when household finances may be stretched due to rising prices and inflation,” says Rebecca Rickert, head of communications at Empower. “Life happens, and people are stressed about the surprise expenses that could tip them off-balance.”

It can be vulnerable to share your financial reality, but it's helpful to hear what other people are doing and dealing with so we all feel less alone when we're struggling. Perhaps if people were more open about money, we'd all be able to help one another find ways to improve our financial situations rather than lamenting our empty savings accounts and wondering how to change them.

This article originally appeared last year.

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Parenting

Teaching financial responsibility: the smart case for giving your child a credit card

“Helping your child build their credit score is an invaluable gift."

Photo credit: Canva

Nearly everything is purchased online these days.

With their colorful designs, customizable parental controls, and growing popularity among peers, it’s no surprise that kid-focused debit and credit cards have become increasingly appealing to families with young ones. Gen Z and Gen Alpha live in a vastly different financial landscape from their parents, and now, digital payments have largely eclipsed cash transactions. From concert tickets to food delivery to school supplies, nearly everything is purchased online. So, how can parents prepare their children for this new digital frontier and financial world that they themselves have not even experienced?

Ask the average parent about giving a credit card to a child, and they'll dream up a nightmare scenario: spoiled kids making endless purchases, unchecked impulse buying, mounting debt, and the development of poor financial habits. However, for the first generation growing up in an almost entirely cashless society, it makes sense for them to understand the value of money and how it’s used sooner rather than later.

Money, tree, financial responsibility, independence, financial literacyThe goal is financial independence. Photo by micheile henderson on Unsplash


According to a 2019 CreditCards.com poll, six million American parents have at least one minor child with a credit card. Winnie Sun, co-founder and managing director of Sun Group Wealth Partners and member of the CNBC Financial Advisor Council, gave her three children credit cards before they entered kindergarten. While this might seem extreme, she believes these early financial practices helped her children develop healthy money habits. In her Op-Ed for CNBC, Sun notes that her own parents added her to their Visa Gold card when she was 13 years old.

"My mom specifically told me that it was for emergencies, or if I had permission beforehand to use it," Sun recalls. "She thought it was a way to help her daughter in case she needed money, but what she didn't know then was that it also helped me learn how to handle credit early in life.”

Credit card, finance, debit card, swipe, financial literacyEarly financial education is crucial. Giphy

Financial experts are increasingly convinced that young adolescents should be included in conversations about money, recognizing that early financial education is essential for navigating today's digital economy. But when’s the right time? Andrew Latham, a certified financial planner with SuperMoney, explains that parents should assess readiness based on specific criteria.

“Parents should consider their child’s ability to handle financial responsibilities, understanding of money management and the overall need for a card. If a child can budget their allowance and has consistent needs to make purchases independently, they may be ready for a card,” he explains.

And which option is better for kids: debit or credit? Well, there are distinct advantages and potential drawbacks associated with both, which parents should consider carefully.

Credit cards

The primary benefit of getting your child a credit card is building a credit history. Credit history length makes up about 15% of your FICO score and up to 20% of your VantageScore. A longer credit history shows that someone has managed their accounts responsibly over time, demonstrating reliable financial behavior. As a result, lenders and credit card companies are more likely to approve applications and offer better terms to those with an established, positive credit history. By adding your child as an authorized user on a credit card with consistent, on-time payments, you can help them build strong credit from an early age.

Child, strong, financial literacy, credit score, money You can help your child build strong credit. Photo by Ben White on Unsplash

“Helping your child build their credit score is an invaluable gift,” writes Jae Bratton for NerdWallet. “A good credit score may help them secure a job, get lower interest rates on loans and, when the time comes, a top-notch credit card of their own.”

However, there are risks. Children under 18 cannot legally have their own credit card; they can only be authorized users on a parent’s account. As the name suggests, authorized users are allowed to use the card, but aren’t responsible for paying the bill. Therefore, parents will ultimately be responsible for all charges made on the card. If your child makes an expensive purchase, it could potentially affect your own credit utilization ratio and even damage their credit score. Jessica Pelletier, Executive Director of FitMoney, a nonprofit that provides free financial literacy curricula for K-12 schools, advises parents to remind their children that “there are firm limits…in place for authorized users.”

Debit cards

On the other hand, debit cards offer a more flexible yet tangible way for children to understand how to manage spending money. For Matt Gromada, the head of youth, family and starter banking at JPMorgan Chase & Co., he believes that early debit card access is a crucial component to lifelong financial literacy.

“Having a debit card opens the door for important conversations and real-world scenarios about the basics of finance—from spending and saving to explaining interest and how it accrues. It also gives your child a sense of pride, independence, and freedom, providing an opportunity for real-life experiences and learning,” he says.

Breaking free, financial literacy, debt, money, money management Break free of financial debt. Giphy

With debit cards, kids are limited to the amount of money available in the account, so they can't overspend beyond what is in the account. There are even modern debit cards specifically designed for kids, such as Greenlight, which offers a range of features that make parents and children feel secure and in control. There is no minimum age requirement for users, and parents can restrict spending at certain stores, set up safety SOS alerts, receive real-time notifications, and turn the card on or off remotely. This is also an easy way to transfer allowances to your child.

According to BECU, a financial cooperative, “a debit card can help your child learn financial responsibility basics such as keeping a card in a safe, dependable location, staying within spending limits, using a card for purchases, checking on balances, and monitoring for fraud.”

Of course, the main drawback of debit cards is that they don’t help establish or build a credit history. So, what’s right for you and your family? Start a dialogue today and discuss the best option for your children.

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Only 4 percent of Americans can answer these 7 financial questions correctly. Can you?

In the current economy, financial literacy is more important than ever.

Photo credit: Canva

A quiz reveals some holes in Americans' financial literacy.

Financial literacy is always important, but in uncertain economic times, it's vital. The financial world is complex and multi-faceted, and there's no exact gauge of what you need to know in order to be considered informed. There are, however, some financial fundamentals that everyone needs to understand on a basic level in order to avoid making catastrophic money decisions and to be able to follow what's happening with the economy on a larger scale.

Unfortunately, many Americans have never taken an economics class and aren't well-versed in things like inflation, investments, interest rates, and other economic realities. To be fair, economics can be confusing even when you try to learn, but without understanding some basic concepts, it can make a huge difference in your financial wellbeing.

financial literacy, money, finances, economics, economyMany Americans need to increase their financial literacy.Photo credit: Canva

The non-profit FINRA Investor Education Foundation surveyed 25,500 adult Americans and asked them to take a seven-question financial knowledge quiz to test their financial literacy. The results were a bit concerning, as only a small fraction of quiz-takers answered all seven questions correctly.

Here are the questions they asked:

1. Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?

More than $102

Exactly $102

Less than $102

Don't Know

2. Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?

3. If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?

4.True or false: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.

5. True or false: Buying a single company's stock usually provides a safer return than a stock mutual fund.

6. Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn't pay anything off, at this interest rate, how many years would it take for the amount you owe to double?

a) 0 to 2 years

b) 2 to 4 years

c) 5 to 9 years

d) 10 or more years

e) Don't know

financial literacy, math literacy, economics, finances, money managementSome financial literacy is just math literacy—understanding percentages and probabilities. Photo credit: Canva

7. Which of the following indicates the highest probability of getting a particular disease?

a) There is a one-in-twenty chance of getting the disease

b) 2% of the population will get the disease

c) 25 out of every 1,000 people will get the disease

d) Don't know

"Don't know" was an option for each question, and the average correct score across the Americans who took the quiz was 3.3 out of 7. Nationwide, 27% of people who took the quiz got the right answers on at least five of the questions, and only 4% aced all seven questions.

- YouTubewww.youtube.com

Which states fared the best and worst? Here are the 10 top states by percentage of survey respondents that correctly answered five or more of the quiz question:

1. Minnesota (34.78%)

2. Wisconsin (34.46%)

3. District of Columbia (34.41%)

4. Colorado (33.89%)

5. Wyoming (33.85%)

6. Washington (32.54%)

7. Vermont (32.34%)

8. North Dakota (32.00%)

9. Oregon (31.86%)

10 Kansas (31.44%)

And here are the bottom 5 by the same metric:

New Mexico (23.2%)

West Virginia (21.4%)

Alabama (20.2%)

Mississippi (19.2%)

Louisiana (18.1%)

One piece of good news: Americans' understanding of inflation has increased significantly since the last time FINRA did a similar survey in 2021. (Or maybe that's not such good news, as it's likely a better understanding that came from experiencing an inflation crisis, but learning is learning.)

"Overall, the findings show that knowledge of everyday financial concepts remains a challenge for many Americans. The wide disparities in financial knowledge across states demonstrate that more work is required to empower all Americans with the skills and tools to make informed financial decisions and safeguard their investments,” said Gerri Walsh, President of the FINRA Foundation. "The increase in the number of respondents who correctly answered the question about the impact of inflation on savings is an encouraging sign, likely reflecting the impact of lived experience as well as increased focus on the topic. However, continued efforts are needed to ensure all Americans fully understand the effects of economic factors on their personal finances."

Not only does a lack of financial knowledge have the potential to impact people's personal finances, such as getting into credit card debt trouble or choosing unwise investments, but not understanding how things like inflation and the relationship between interest rates and investment markets can lead people to vote for politicians with questionable economic policies. How can you believe a politician will be good for the economy if you don't understand what factors contribute to keeping the economy stable and strong?

You can take the quiz yourself here and see how your knowledge compares.

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Community

Fiercely hilarious exchange finally settles the debate over how to split the check with friends

Why should I pay for your lobster?

Canva

A woman side-eyes a bill from a restaurant.

Picture this. You're at dinner with a bunch of friends. You're not super hungry and a little strapped for cash, so you order a small Caesar salad and one beer. The check comes and your friend (we'll call her Wanda) says, "Okay everyone, let's just splitsies. That's 100 dollars per person. Venmo is fine."

If I had a dime for every time this happened to me, I'd be rich enough to actually pay for other people's filet mignon. It's especially annoying when that "one person" (looking at you, Wanda) orders ten appetizers for the table and you find yourself with one forkful of roasted cauliflower but are still expected to absorb that into your portion of the bill. And apparently, I'm not alone in this quandary. The "how should the bill be split?" question has re-emerged as one of the most fierce debates online, and folks have a lot of opinions.

- YouTubewww.youtube.com

Over on the subreddit r/poor, an OP asks, "How to handle splitting dinner bill when others order expensive things?" They essentially elaborate that they would like advice on what to do if someone in your dinner party orders "expensive rib-eyes and wine" and then suggests evenly splitting the bill. "Any elegant ways to approach this?"

One commenter gets right to the point: "Pay for what you order. Plain and simple." But some argue it's not so plain and simple. This person claims you must get ahead of it: "Nah bro, before going to the place clarify that you're not splitting the bill, that everyone is paying for their own food. Then tell the server that you're doing separate checks."

- YouTubewww.youtube.com

A lot of waitstaff have complained, however, that they don't actually like the separate check option, as it's a huge, unnecessary hassle for the restaurant. So, barring that method, some actually say if you can't split the bill, "don't go out." That judgmental belief was met with this: "I've honestly never understood the greed and gluttony of some people. They want to split the bill, conveniently enough, when they've put the most on the tab. I've always found that the people with the least to give are the first to offer to pay or treat someone else. Those with the most money like taking advantage."

That Redditor also offered this advice: "If you can only afford your own meal, bring exact change or close to what you think it will be and throw that in when the bill comes."

TikTok user Lisa Beverly (lisabeverlyy) has an entire sketch about it. Playing both roles, she acts out the super relatable conversation between the one who orders everything and wants to split the bill, and the one who orders nothing and doesn't.

@lisabeverlyy

who’s in the right #pov #friends #besties #relatable

Experts are even weighing in. On YouTube, NPR put up this nifty video plugging theirLife Kit podcast called "The Social Etiquette of Splitting the Check." In it, they describe different scenarios and ways to combat the awkwardness when these situations arise. One suggestion is to "speak up," as "it can make people a little bit more conscious of the non-drinkers in the group."

She also brings up the "separate check" option, but notes that can be a "tough ask" if the group is super large.

- YouTubewww.youtube.com

If all else fails, and you find yourself unable to use these tactics, maybe YOU should be the one ordering the surf 'n' turf with a side of 60-year-old whiskey. Then, ask for a Venmo of 1,000 each, and you'll be set.

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