The latest financial figures show that millions of Americans will increasingly feel the crisis in the coming months.
The combined debt of US households rose to a record $17.5 trillion in the last three months of 2023 – and inflation has raged across all parts of the US.
At the same time, as many as 80 percent of Americans now have less cash on hand than they did before the pandemic.
Financial expert Craig Bolanos, the CEO of Illinois-based Wealth Management Group, spoke to an ABC affiliate in Chicago about some tips on how to save hundreds of dollars a year.
Bolanos, whose company provides wealth management services, says the obvious starting point for saving money is to open a savings account.
Craig Bolanos, CEO of Illinois-based Wealth Management Group, appeared on ABC Chicago to share some tips on how to save money during a stressful financial period for Americans
And while record high interest rates make it harder to borrow money for cars, mortgages and everything else, they have a distinct advantage.
Bolanos points out that interest rates on savings accounts are the highest in fifteen years.
“I want everyone to open a savings account or a high-yield savings account and sit next to that checking account to earn some extra interest.
Major banks and financial institutions such as Capital One, American Express and Barclays all offer high-yield savings accounts with annual returns as high as 4.35 percent.
In practice, if you put €500 in a savings account with an interest of 4.35 percent and leave it for a year without making any contributions, you will have €776.48 at the end of that year.
If you increased your monthly contributions to just $20, as Bolanos suggests, your $500 would turn into $3,786 after a year.
Capital One Bank offers a 4.25 percent APY for select savings accounts
Saving is of course only one side of the equation.
Taking a page from Dave Ramsey’s playbook, Bolanos said spending is the other behavior Americans need to change to have more money in their pockets.
First, the streaming services, for which we estimate Americans pay an average of $61 per month a report from Deloitte.
Bolanos says that if you were to cut even one service, you could save about $15 per month, which would turn into $180 over the course of a year.
Netflix and Disney+ are among the biggest streaming services, and their ad-free packages cost $15.49 and $13.99 respectively
It’s also important to cut back on takeout and coffee from places like Starbucks, Bolanos says. If you eat out one less night or drink two fewer of your favorite sweet, caffeinated beverage, you can save about $12 per month, or $144 per year.
Bolanos says that if you were to cut even one streaming service, you could save about $15 a month, which would turn into $180 over the course of a year
If you eat out one less night or drink two fewer of your favorite sweet, caffeinated beverage, you can save about $12 per month, or $144 per year
Finally, Bolanos recommended shopping around for your insurance before simply purchasing reinsurance if you receive a renewal notice in the mail.
That goes for health insurance, car insurance, homeowners insurance, and basically any other type of plan you can buy.
By doing this, Bolanos says you can save up to 20 percent per month.
As we enter 2024, Americans appear to be following the advice to reduce their spending.
A Wells Fargo investigation February 2024 found that 67 percent of Americans are actually cutting back on their spending.
Yet more than 35 percent say they have used their savings or investments to cover costs, and even more (62 percent) say they have little left for ‘perks’ after paying the bills.
“The data tells us that Americans – no matter who they are – are uncertain about the sustainability of their financial lives,” said Michael Liersch, head of advisory and planning at Wells Fargo.