By: Keira Wingate
Being a stay-at-home parent comes with a lot of challenges and Haylee Bachman is working hard to power through them all for her family of three in Washington. But not having a savings account is one she can’t seem to beat.
Bachman, 27, and her boyfriend, 32, both work to pay bills, buy groceries and take care of their son. However, with the little money they have left over each month — $20 to $30 — trying to save has become impossible.
“We don’t make enough money for a [savings account],” she said. “My boyfriend is our main source of income because if I worked we would have to pay for daycare, which doesn’t make sense for us. The money I make from our small business is enough to pay for groceries, formula and baby things, but not enough for a savings account.”
Bachman is just one of many young millennials who were unable to build big savings account during the COVID-19 pandemic, leading her to highlight the same theme as others — the feeling of being behind.
Faced with a high cost of living, a mountain of student loan debt and a not-so-livable salary, this generation overall, is plagued with financial problems that others didn’t have to face at their age.
According to U.S. Census Bureau data, the median earnings for full-time workers age 18 to 34 were $35,845 in 1980. By 2000 the same group was earning $37,355. For the period of 2009-2013, however, full-time workers between 18 and 34 had median earnings of just $33,883.
Low earnings, the recession and heavy student debt burden are some of the reasons many aren’t able to form the households they want, buy property or build a savings. While wages have risen 67% since 1970, even inflation stands in the way of moving forward because rent, home prices and college tuition have all increased faster than income in the US.
“I feel very behind,” Bachman said. “Lots of others have savings and even used those savings to buy a house so I compare myself a lot. I had this idea at 16 that by 25 I would have so much savings and it’s disappointing to know I didn’t achieve that.”
Some recent data reports suggest millennials are closing saving gaps.
Bank of America put out a 2020 report showing 73% of millennials between the ages of 24-41 had a savings account, up from 63% reported in 2018. The report also shows that 59% of millennials have more than 15,000 in their savings account and 24% with over $100,000. However, the report does not show or explain any distinction between younger and older millennials.
Jennah Smith, a 26-year-old hardware procurement and administrative specialist and single mother in California has a savings account, but it hasn’t had more than a few dollars in it in years, increasing her anxiety.
“I feel like every time I add to my savings, something happens and I have to deplete it. It’s also hard to add anything to it because by the time I’ve paid for all of my bills, I don’t have much remaining to be able to.”
She added that she “feels so behind, especially now that trading stocks have become so common. I feel like people I know can afford a lot of things I can’t, and of course, being a young single mom plays into that, but I just feel like I am so behind.”
Erin McCullen, head of consumer deposit products at Bank of America says saving is important regardless of age and that millennials are not alone in the worry of not having a savings account.
“Here at the bank what we are doing is continually educating you know,” she said. “… We recognize here at the bank, too, that every customer’s needs are different. That’s the other thing. So we have multiple solutions that can help.”
McCullen says Bank of America offers multiple opportunities and ways for people to save money no matter what financial situation they are in. One, in particular, is its “keep the change” program, which allows for your change to be rounded up and put into a savings account.
While trying to save may seem daunting and overwhelming, other strategies are possible to help brighten up a savings account. Tara Unverzagt, a financial planner at South Bay Financial Partners says one thing to help get started is to simply educate yourself.
“A lot of young people feel so behind,” she said. “To be honest, parents, in general, haven’t been great about teaching financial literacy skills mostly because they were never taught themselves. Learning how to think about money and make money decisions that work for you, your life, and your values is the most important first step.”
Just starting with a small amount of $5 is the best way to begin building a savings, adding that taking that step is best to then “move onto actually funding the savings,” says Kayla Welte, a financial planner at District of Capital Management.
“Making smaller changes over time creates a much more likely-to-succeed scenario than trying to change everything all at once,” she continued.”
This is the way Bachman plans on beginning her savings journey for her family. It’ll be challenging, but her goal is to have multiple savings accounts.
“I would love for us to put $10 away or more every paycheck,” she said.