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Updated on Monday, December 21, 2020
One in 4 consumers withdrew money from their savings in December, the largest in the 15-month history of MagnifyMoney’s Savings Index.
At the same time, consumer savings continued to drop. Only 33% of Americans added or planned to add money to their savings this month, a 21% decrease from December 2019, when 42% had increased their savings.
The coronavirus pandemic’s crushing impact on consumers’ personal finances continues to be evident in our monthly survey of 1,000-plus Americans. Read on for more details from the latest report.
- Key findings
- Consumers’ ability to save continues to decrease as many turn to savings to cover expenses
- Men, college graduates and high earners more likely to save
- What consumers are saving for
- 1 in 4 Americans pulled money from their savings in December, a new high in the 15-month history of our Savings Index.
- The percentage of consumers saving money dropped by 21% compared with the same time last year. Only 33% added money to their savings this month, while 42% had done so last December.
- Men, college graduates and six-figure earners all added money to their savings at much higher rates than the rest of the population. Interestingly, those who didn’t experience income loss during the pandemic were only a few percentage points more likely to save than consumers who were laid off or furloughed.
- Nearly half (48%) of consumers who earn less than $25,000 a year don’t have any money saved. That drops to 31% at the next income bracket ($25,000 to $34,999) and is only 3% for those who make $100,000 or more.
- Aside from general savings and emergencies, vacations are the top item that consumers are saving for in December, at 16%. Still, that’s less than last December, when 21% were saving up for a trip.
Consumers’ ability to save continues to decrease as many turn to savings to cover expenses
The chart below is a clear picture of the pandemic’s impact on consumers’ ability to save, as well as their increased need to use those savings.
While the percentage of consumers adding money to savings hasn’t reached its low of 31% — when the pandemic first hit the U.S. in March — it’s close, at just two percentage points higher. And the percentage of Americans depleting funds from those savings reached its peak after months of seesawing.
When this month’s survey was conducted, the first doses of the COVID-19 vaccine had not yet been distributed. We’ll have a better picture of how this turning point will impact consumer savings in January’s edition.
Men, college graduates and high earners more likely to save
The overall percentage of consumers saving money in December remains low at 33%, but some groups far surpassed that average.
Here’s a breakdown of Americans’ ability to increase their savings by gender, education and income.
- Men: 41% saved money in December
- Women: 25%
- Those with a high school education: 22% saved money in December
- Those with some college but no degree: 20%
- Those with a bachelor’s degree or higher: 48%
- Less than $25,000: 17% saved money in December
- $25,000 to $34,999: 23%
- $35,000 to $49,999: 24%
- $50,000 to $74,999: 32%
- $75,000 to $99,999: 38%
- $100,000 or more: 56%
What consumers are saving for
If one thing is clear, we deserve a vacation for making it through 2020. That’s the top savings goal for Americans other than building up funds for general savings needs and emergencies.
Still, 21% don’t have any savings at all. Despite the promise of a COVID-19 vaccine, the pandemic’s economic impacts aren’t over yet.
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 if you can take advantage of special savings bonus offers.
Every month, MagnifyMoney surveys consumers to find out whether they added money to their savings — and what they’re saving for. The results comprise our monthly Savings Index, which began in October 2019.
For the December 2020 edition, MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,023 American consumers, with the sample base proportioned to represent the overall population. The survey was fielded on Dec. 9-11, 2020.