The 10 States Where People Save the Least
24/7 Wall St.
March 5, 2013
Over one in four American households do not to have enough to survive three months if they lost their regular income.
According to the latest data released by the Corporation for Enterprise Development (CFED), fewer than 70% of households have an actual savings accounts. In Arkansas, just 45.8% of households were keeping savings in a bank in 2011. 24/7 Wall St. reviewed the states where the largest percentage of households do not have a savings account.
In an interview with 24/7 Wall St., CFED Senior Program Manager Kasey Wiedrich said that low-income families are much less likely to have a savings account, and the primary reason is that they believe they cannot afford it. "For a lot of people, the main reason they don't have a bank account is that they don't think they have enough money. They don't feel like it's any use to them."
Indeed, a review of the data shows that people in low-income areas save much less. These states have a very high proportion of low-income jobs. Of the 10 states with the fewest families saving money, all have a median income lower than the national figure of $50,502. The four worst states for savings accounts also are the four lowest-income states.
Poverty is also extremely high in these states. Seven of the 10 states with the highest poverty rates in the country are on this list of states with the smallest percentage of families keeping money in a savings account.
According to Wiedrich, part of the reason many families do not have a bank account is that they view the system as less than transparent about such items as fees and overdraft charges. In order to be more accessible to low-income families, Wiedrich explained, there needs to be a change in the transparency level of banks and lenders.
To determine the states with the lowest percentage of households that save, 24/7 Wall St. examined data published by the Corporation for Enterprise Development's Assets and Opportunities Scorecard. Information on the percentage of households with a savings account and on the percentage of households with no bank accounts was originally compiled by the Federal Deposit Insurance Corporation (FDIC). Information on asset poverty rates, defined as the percentage of households that did not own enough assets to live at the poverty level for three months if they lost their regular income, comes from the Bay Area Council Economic Institute. Information on the percentage of consumers with subprime credit ratings come from TransUnion. Average Credit Score for January 2013 is also calculated by TransUnion, but was provided by CreditKarma. Further information on income and poverty were provided by the U.S. Census Bureau.
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