Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
Updated on Monday, April 5, 2021
Ready to spend? With a lower percentage of consumers stashing cash in March than the first two months of the year, the question of whether the end of the pandemic is in sight may be playing a role in how people are moving their money.
But perhaps the horrors of last March — cue empty toilet paper aisle flashbacks — and fear of the unknown still to come inspired better savings habits than March 2020.
More than 1,000 Americans are surveyed monthly for our Savings Index, and here’s what we learned this time around.
- Key findings
- Cash windfalls meet pandemic fatigue
- Gen Z eyes the future, but lives in the now
- Millennials want a house, while baby boomers want a housesitter
- While many consumers await tax refunds and economic impact payments, fewer saved money in March than in the first two months of 2021. Thirty-six percent of Americans put money in their savings in March, down from 46% in February and 38% in January. But more are saving now compared with last March, when 31% increased their savings.
- About 1 in 3 Gen Zers pulled money from their savings in March, more than any other generation. Unsurprisingly, Gen Zers were also least likely to add money to savings, at 23%, compared with 34% of millennials, 35% of Gen Xers and 42% of baby boomers.
- Half of respondents with an income of $100,000 or more didn’t put any money in savings this month — with 6% of them saying they don’t have any money saved at all. While those consumers are significantly better off than those earning less than $35,000 (in that income bracket, 77% didn’t save money in March — 40% of whom have nothing saved), it’s still mystifying.
- Only 22% of consumers are actively saving for emergencies. To be fair, many respondents are tucking money away for general savings or other specific needs. But if 2020 taught us anything, having money set aside for the unpredictable is critical.
- With graduation on the horizon, 1 in 4 Gen Zers are saving for college — the top savings goal for that generation. The most common savings goal for millennials — when excluding general savings, retirement and emergencies — is a new house, while Gen Xers and baby boomers are focused on vacation.
Cash windfalls meet pandemic fatigue
This March brought many consumers some extra cash through another round of economic impact payments, as well as tax refunds. The extra dough could explain the bump in savings when compared with March 2020.
But March represented a drop-off point in savings compared with the previous month. In fact, 36% of Americans put money in their savings in March, down from 46% in February and 38% in January.
As many places around the U.S. reopen and the vaccine rollout makes consumers more comfortable about leisure activities, it’s possible that spending in categories from dining to travel to shopping are replacing extra savings.
On the other hand, our index to this point has found a “stimulus effect” on savings based on the economic impact payments.
For example, after the first round of payments in April 2020, personal savings rates among consumers jumped to 42% in May. When the second round of payments were distributed in late December and early January, the percentage of consumers saving money hit 46% in February. So stay tuned to see what happens in April.
Gen Z eyes the future, but lives in the now
Though 1 in 4 Gen Zers are saving for college, the young generation also had the most consumers pulling from their savings, with nearly 1 in 3 making withdrawals in March.
Additionally, Gen Z trailed its older peers when adding to their savings accounts, with only 23% from the generation contributing to savings, compared with:
- 34% of millennials
- 35% of Gen Xers
- 42% of baby boomers
While a number of factors might explain the disparity, it’s possible Gen Zers are finding different outlets for their extra cash, such as investing in stocks. A recent MagnifyMoney study found younger Americans were more likely to put their money in the stock market rather than in savings bonds and certificates of deposit (CDs).
And though it’s possible to see better returns on your stock portfolio than with a high-yield savings account — especially in today’s low-rate environment — it’s still advisable to keep an easily accessible emergency fund, though only 22% of consumers are saving explicitly for this purpose.
Millennials want a house, while baby boomers want a housesitter
Beyond general savings, emergency savings and retirement, saving for a house topped the list for millennials, while vacation was the top choice for Gen Xers and baby boomers.
Whether you’re saving for a post-pandemic splurge or looking further ahead into the future, where you put your money right now can make all the difference. Stashing cash in envelopes can help you build a safety net, but you’ll save faster and more efficiently if your money is growing passively in a high-yield savings account.
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 March 2021 edition, MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,040 American consumers, with the sample base proportioned to represent the overall population. The survey was fielded on March 17-22, 2021.
We defined generations as the following ages in 2021:
- Generation Z: 18 to 24
- Millennial: 25 to 40
- Generation X: 41 to 55
- Baby boomer: 56 to 75
While the survey also included consumers from the silent generation (defined as those 76 and older), the sample size was too small to include findings related to that group in the generational breakdowns.