Data Shows a Need for PFM Tools in All Income Brackets

by Ben Jackson 0

More than two-thirds of Americans have no money in savings, and even higher income people have trouble putting money aside, according to a new survey.

The study, from financial services website GoBankingRates, found that those who earn over $150,000 annually don’t fare much better: Some 29 percent have less than a grand in their savings, and 6 percent have nothing saved at all. The study surveyed 7,052 Americans in early August.

Read the Bloomberg story here:

In its analysis, GoBankingRates notes that the cost of living varies from place to place and that can have a big effect on how much someone is able to save, regardless of gross income.

Now, let’s say you live in a city like Los Angeles where you need to make about $74,000 a year to live comfortably. That means you would need to save almost $15,000 throughout the year. But what if you make only $40,000? Living in LA — or any expensive city — would make it hard to stash away $10,000 in a savings account — and nearly impossible to save $15,000.

Read the GoBankingRates write up here:

The lesson for the payments industry from this data is that its customers need help managing their money. Having personal financial management apps, budgeting tools, and encourage people to do things that help them save money, stay creditworthy, and pay off debts will help keep portfolios healthy in the long run. It may make sense for some providers to offer prepaid cards as a budgeting tool to provide another way to do things like shop online when a customer starts to get overextended.

Overview by Ben Jackson, Director, Prepaid Advisory Service at Mercator Advisory Group