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Updated on Thursday, October 29, 2020
The percentage of consumers who’ve added money to their savings has decreased by 13% in the past year, from 45% in October 2019 to 39% in October 2020. Meanwhile, 23% withdrew money from their savings in October, up from 15% a year ago.
A lot has changed in the past year, with the coronavirus pandemic wreaking havoc on nearly every aspect of society — and that’s evident in the latest edition of our savings index.
- Key findings
- One year later: What’s changed?
- What consumers are saving for
- Low-income individuals and those laid off amid the pandemic struggle to save
- 39% of American consumers contributed money to their savings accounts in October, down from 42% in September and 45% in October 2019.
- Nearly a quarter of consumers (23%) withdrew funds from their savings accounts this month, versus 15% a year ago.
- Those laid off or furloughed due to the pandemic tapped their savings accounts in October at twice the rate of consumers who didn’t experience income loss — 35% and 15%, respectively.
- A massive split exists in the savings habits of the lowest- and highest-earning individuals. Only 23% of consumers who make less than $25,000 contributed money to savings this month, compared with 58% of those who earn $100,000 or more. But 36% of those in the lowest income bracket don’t have any savings, while only 3% of the six-figure earners said the same.
One year later: What’s changed?
When MagnifyMoney first began tracking consumers’ savings behavior in October 2019, 45% were stashing money in their savings accounts. This month, only 39% had done so. That’s a 13% decrease in the percentage of Americans adding money to their savings, evidence of the coronavirus pandemic’s lasting impact on consumer finances.
At the same time, consumers are turning to their savings at higher rates than they were prior to the pandemic. Nearly 1 in 6 consumers (15%) withdrew money from their savings last October, while nearly a quarter (23%) had done so this October.
There was another notable change: With December just over a month away, 13% of Americans said this month that they’re saving for the holidays, versus 18% a year ago. That difference of five percentage points may not seem like much, but — for many consumers — their savings could be a make-or-break difference in whether they incur holiday debt.
What consumers are saving for
General savings and emergencies have topped consumers’ savings lists since we began tracking the monthly savings index in October 2019, and this month was no different (these reasons for saving came in at 33% and 26%, respectively).
Retirement took the next spot in October, with 16% of consumers stashing money to build a nest egg. Additionally, 15% are saving for vacations.
Low-income individuals and those laid off amid the pandemic struggle to save
There is a 35 percentage point difference when looking at the highest- and lowest-earning individuals who saved money in October. That’s even more concerning when considering that 36% of consumers who make less than $25,000 don’t have any savings at all, versus only 3% of those who earn more than $100,000.
The pandemic has proven that financial emergencies can happen anytime and to anyone, and those who don’t make much money are already at a disadvantage. It’s hard to even think about saving money when you’re struggling to put food on the table.
For those laid off or furloughed because of the pandemic, savings have been critical in helping make ends meet. For example, 35% of that group withdrew money from their savings accounts this month, compared to just 15% of those whose income wasn’t impacted. But it’s important to note many don’t have any savings to begin with and are left without a financial safety net, especially as Congress remains at a stalemate on additional relief.
There can be room for improvement in American consumers’ savings habits, especially given the pandemic’s economic impacts are far from over. Every dollar you add to your savings makes a difference. Even saving just $5 a week adds up over time, especially if you’re able to open a high-yield savings account offering a competitive interest rate or take advantage of special savings bonus offers.
Every month, MagnifyMoney surveys consumers to find out whether they added money to their savings account — and what they’re saving for. The results comprise our monthly savings index, which began in October 2019.
For the October 2020 edition, MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,038 American consumers, with the sample base proportioned to represent the overall population. We defined generations as the following ages in 2020:
- Gen Z: 18 to 23
- Millennial: 24 to 39
- Gen X: 40 to 54
- Baby boomer: 55 to 74
- Silent generation: 75 and older
The survey was fielded on Oct. 19-21, 2020.