How Biology Affects How Much Money You Should Save

By Sean Bryant
May 18, 2017
Chime is a financial technology company. Banking services provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC

Throughout your life, you may have learned about the importance of saving money. But when it comes to exactly how much you need to save, well, this is still a conundrum for many.

Financial experts will tell you that you should be setting aside 10% of your earnings each month for retirement. Others will tell you that you need an emergency fund that amounts to three to six months of your earnings. But are these figures really right for you? When it comes right down to it, there are many different influences that can affect how much money you actually need to save. Let’s take a look at some of these factors to give you a better idea of how to plan for your future.

Men and women are not created equal

So much has been done over the past half-century to help eliminate the gap between men and women in the workforce. Even though things have improved, the American Association of University Women (AAUW) reports that women still earn roughly 80 cents for every one dollar earned by a man. Lower income means less money available for savings.

But that’s not the only obstacle that women need to overcome. Women also tend to live longer than men, 81 years compared to 76.1 years, which means they should be saving more. Plus, because women are more likely to raise children and take care of sick relatives, they work an average of 28 years compared to the 38 years that a man will work. Because of these factors, Diane Garnick, managing director and chief income strategist at TIAA, recommends that women increase their retirement savings rate to 18% of their income each year.

Some of us are driven by risk

The idea that a human’s genetic makeup influences the way he or she reacts to certain situations is not new. Many studies have shown a correlation between someone’s DNA and his willingness to take risks.

For example, the New York Times recently highlighted this notion with a study conducted by Cynthia Thomson, a teaching fellow at Quest University in British Columbia. She studied approximately 500 skiers and snowboarders in British Columbia and discovered that those willing to take on more risks on the mountain had specific variations of the DRD4 gene. So what does this mean when it comes to your ability to manage money? It means that having an appetite for risk isn’t a bad thing, but it can cloud judgment. For instance, if you’re always looking for added investment gains, maybe you need to take a step back, assess the risks involved and determine if the risks are worth the potential gain.

Family history can help you plan for the future

Although it would be nice to peer into the future, you’re probably not blessed with this talent. Doctors, however, can use your family history to provide you with more accurate health care. For example, if your physician knows that you’re at a higher risk for diabetes, he or she can recommend preventative measures.

Understanding your health risks can also help you financially. For starters, if you know you may face higher than normal medical bills later in life, you can prepare by building a larger emergency fund. To get going, set aside a certain amount of money each month into a savings account earmarked for future medical bills. Just make sure you pay yourself forward to avoid accidentally spending it.

Stress and anxiety can affect decisions

Financial stress is a major issue in the United States. The American Psychological Association, for example, found that 72% of 3,000 adults surveyed experienced some sort of financial stress over the past month. This makes it all the more important to understand your mental health risks. To that end, there is a genetic link between anxiety and depression within families. In fact, parents with higher levels of anxiety are more likely to have children with anxious behaviors, according to a study published in the Proceedings of the National Academy of Sciences.

So what does this mean for you? If you think you get anxious about money, you need to prepare. The best way to do this is to stay on top of your finances by saving for your retirement, building that emergency fund, and developing healthy money habits.

Luckily for you, there are apps and tools that can help you start saving money right now. As a Member of Chime, an online bank, you can begin to get ahead with automatic savings. Each time you use your Chime card to pay a bill or make a purchase, Chime rounds up the amount to the nearest dollar. This rounded up amount is then placed into your savings account. This is a great way to build your savings without even thinking about it.

Being aware is the key to being prepared

We all have different characteristics that make up who we are.

Sometimes your family influences your money habits and sometimes you create your own spending and saving patterns. Occasionally, your genetic makeup may help determine your financial tendencies. Yet, no matter what, you need to understand who you are and what drives your decisions before you can make positive and sound choices about your money matters. Are you ready to learn more about you and start saving more money today?

This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.

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