Customers worry about economy but are saving less in an on-demand world.
PurePoint Financial’s second “State of Savings in America” survey points to financial trends impacting American consumers in 2019. Among key findings, one-fourth of American consumers are choosing convenience over savings with on-demand applications expected to increase this trend.
Freedom from the stress of money is top of mind for American consumers when dreaming about their future (59%), but many don’t have ongoing savings habits that will prepare them for long-term financial success or protect against a potential financial crisis in the future, according to new research from PurePoint Financial, a hybrid digital bank and division of MUFG Union Bank, N.A.
According to the “State of Savings in America” survey, savings balances are down 35% and 88% of Americans are concerned about another economic downturn, and for good reason; 83% of those impacted by the Great Recession are still recovering.
Economists around the world are predicting another market slump, but the research found that 80% of Americans are not very confident they could survive another recession or market downturn in the near future. The reason: six in 10 of those who are not confident are still living paycheck to paycheck.
While nearly half (44%) of respondents impacted by the Great Recession have cited keeping a closer eye on their finances since the recession, one in seven have admitted they haven’t changed their savings behaviors since being impacted.
Confidence Up, Habits Down
Respondents report feeling less anxious about the job market, political environment and other external factors than in 2017. However, consumers are saving less, have worse savings habits and nearly half don’t feel proud of how much they’ve saved. In fact, fewer Americans are disciplined, habitual savers. Forty-one percent of respondents are saving via direct deposit, down 6% points from 2017. Even more so, crash diet saving is a popular tactic, with half of Millennials categorizing themselves as aggressive short-term savers.
Surprisingly, more consumers are taking savings into their own hands, with 16% of respondents reporting hiding cash around their homes, compared to 12% in 2017. Some 73% of respondents are not actively looking for the best rates or places to save the money they are putting aside, possibly leaving money on the table. As a result, respondents reported a decline in median savings balances, down to $1,500 in 2018 compared to $2,300 in 2017.
According to the Federal Reserve, there is more than $9 trillion sitting in accounts earning less than .09 basis points. PurePoint experts recommend saving at least 10% of your annual income in a high-yield savings account with at least 2% interest rate.
“Our survey found that one in three people in the U.S. don’t feel in control of their finances and half are too embarrassed to talk about their savings with their friends,” continued Habis. “We understand how important financial security is to all of us and that saving may seem daunting, but it just takes minor adjustments, such as creating financial goals, setting aside whatever you can manage from each paycheck or searching for a better interest rate for your savings account.”
Creating Habits in Fitness and Finances
When ranking the top three most important factors in their future, respondents reported having good health (76%), financial savings (73%) and a relationship/family (68%) as the top three responses. That said, respondents noted that saving is their most rewarding activity, even more than losing weight (79% vs. 47%). But there’s more work to be done with crash-diet savers; two in five respondents consider themselves as aggressive short-term savers, for things like weddings and trips, but they’re not consistently saving in between.
Consumers Are Living for Today
Despite concern about their future financial health, at least one quarter of consumers admit to prioritizing convenience over saving. The quick rise of on-demand applications indicates this number will quickly increase over time. The research found that two in five respondents would spend four times as much on transportation to save 20 minutes and one in three would choose to take $1,000 now rather than waiting a year for $3,000; this number was significantly higher with Millennials at 43%.
The 2018 PurePoint State of Savings in America survey is an online survey among 6,000 adults in the U.S. (aged 18+), commissioned by PurePoint Financial and conducted by independent research firm Edelman Intelligence. The survey examined current behaviors, drivers, and barriers to saving among adults in the U.S. Data was collected Dec. 15, 2018 – Jan. 2, 2019, with a margin of error of +/- 1.27%. 2018 was the second wave of the survey, building off of the benchmark wave that was conducted in July/August 2017.