Saving money means conserving money for future use. It involves putting aside a percentage of one’s income to cater for future expenses or investment purposes. Saving trends change from time to time depending on the economic landscape. Households save more money when they feel uncertain about their financial future. After the outbreak of Covid-19, savings doubled as people prepared themselves for tough times ahead. A similar trend was observed after the financial crisis in 2008. When people feel secure, and there is a financial boom, however, people feel that their future is secure, and they save less and spend more.
People’s saving behavior can help you to understand how people feel about their present and future financial lives. Individuals also save for both long-term and short-term goals. Long-term goals include retirement and children’s education, Short term saving goals include, saving money for going on a holiday, buying a car, for a house renovation, and other purchases.
Read through this article to find out the money-saving trends observed over the years and the implications of those saving trends.
Important Money Saving Statistics
In this section, we present some startling money-saving statistics to help you get a general overview of money-saving trends identified in the US from 2008 to January 2021.
- The rate of personal saving in the US was 3.6% in 2007 compared to 6.4% after the worldwide financial crisis in 2008.
- By the end of 2019 personal saving was at the rate of 7.6 percent compared to 13.7 percent at the end of 2020.
- In January 2020 the rate of personal savings rate was 19.8 percent and increased to 33.7% in April compared to 13.6 percent in February 2021.
- The gross personal saving total in the US was 5.83 trillion USD by the end of 2020.
- The value of saving deposits in the US depository institutions increased from $0.39 trillion to $10.63 trillion by April 2020
- 29 percent of the US saving adults saved more for retirement than any other purpose in 2019.
- 69% of Americans had saved less than $1000 in their savings account in 2019.
People save more money between 2008 and 2020, according to the data, than in any other year since 2000. The economic circumstances that existed throughout these two years had an impact on the individual’s saving behavior. Because of the global financial crisis that began in 2008 and endangered people’s financial stability, many increased their savings to guarantee that they would be able to live through the tough times. Following the emergence of Covid-19 in 2020, the same pattern was seen again..
After almost doubling between January 2020 and April 2020, the rate of personal saving began to decline dramatically in January 2021. Lockdowns and travel restrictions were lifted in a number of nations in January 2021, giving the impression that life was returning to normal. Individuals gained a feeling of confidence about their financial future as a result of these events, which may be linked to a reduction in the pace of personal saving as a result of these occurrences.
Why do People Save?
There are many reasons why people save. The statistics below offer some drivers that motivate people to save.
1. In a 2019 study, 38.1% of American saving respondents indicated that they were saving for liquidity in contrast to 5% who saved to buy a home.
The majority of Americans set aside money to guarantee that they would be able to cover unforeseen expenditures in the future. In most people’s lives, their financial stability in the future takes priority over anything else. Only a small percentage of those who were saving in 2019 indicated they were doing it for long-term goals such as property or starting a company.
2. A 2020 survey showed that age is the main retirement savings trigger for most working Americans.
(Source: make it)
Individuals’ retirement funds guarantee that they will be able to live a decent life once they have retired from active duty. According to the 2020 research, the majority of Americans begin to save for retirement once they reach a specific retirement age. Six percent of those polled, on the other hand, said that they began saving for retirement after they had paid off their school debts. According to the findings of the study, 39 percent of participants began saving for retirement while in their 20s, 15 percent in their 40s, and 6 percent in their 50s. As a result, reaching retirement age is a critical milestone in investing for retirement.
3. In 2016, 57% of American parents were saving for their children’s college education compared to 56% in 2018.
College education in the United States is very costly, as shown by the behavioural patterns of parents when it comes to saving. Although there has been a one percent reduction in higher education savers, this fall is insignificant and cannot be used to demonstrate that college education is getting more cheap. As of 2009, 62% of college students were saving for their education, indicating that the decline in college savings had been just 6% during the previous nine years. By 2018, 30 percent of the money saved for college had been deposited into a 529 savings account, which offers tax advantages over traditional savings accounts.
The following statistics reveal saving trends that were observed in the US in 2019.
4. In 2019, the assets of the section 529 savings plan reached 345.6 billion U.S. dollars.
Despite the fact that the kid is the beneficiary of this account, the account is controlled by the parent. The funds in this account are meant to be used to cover the costs of the child’s future education. Considering the assets were assessed at $8.6 billion in 2001, this account had grown by more than 400 percent in just 19 years, according to the asset valuation. The cause for this increase may be traced back to the importance that parents have placed on their children’s education over the years. Parents in the United States have made significant financial investments in this area to guarantee that their children get a high-quality education.
5. In 2019, 46.4 percent of the households in the United States owned mutual funds.
Toward the end of 2019, less than half of all American households had a mutual funds account. According to the Census Bureau, 45.7 percent of American households held mutual funds in 2000, implying that the number of families holding mutual funds in America has grown by just 0.7 percent in the last nineteen years. More than half of American families believe that they do not have a need to save in mutual funds. Because the funds are managed by experts, it’s possible that the vast majority of individuals do not feel in command of their money.
6. 29% of adult Americans contributing to retirement savings accounts had increased their retirement savings in 2019 than they were saving in 2018.
Because of their growing worry for their retirement years, the people have raised their retirement savings to guarantee that they would be financially comfortable when they leave the workforce in their golden years.
7. By 2016, the saving households share was 82.3% for families in the top ten high-income categories compared to 32.1% of the families in the lowest income category.
It is apparent from this data that there is a significant gap in savings between high-income Americans and those who earn low salaries in the United States. The savings portion of high-income families was 50.2 percent higher than that of low-income households, indicating a significant disparity between the two groups. In 2019, a similar pattern was found, with low-income families accounting for an average of $800 in savings, compared to an average of $69000 for the families with the highest earnings in 2019.
8. 52% of American families saved money in 2010 compared to 60% of the families that saved money n 2019
Since 2010, there has been a steady rise in the number of American households that have set aside money for the future. In terms of the number of families that saved, 2019 was one of the most successful years in the last 10 years. This was a consequence of the lessons that individuals learnt through the recession that occurred in 2008.
9. In 2019, 62.8% of White non-Hispanic households were possible savers compared to 44.7% Latino or Hispanic households.
The proportion of American families that have saved varies depending on their ethnicity. This is a consequence of the wealth distribution among the various ethnic groups in the American population, as we discovered previously when we discovered that saving was linked to the amount of income. When compared to families of other ethnicities, white American households had much greater savings.
10. 62% of families with self-employed family heads saved money in 2019 compared to 50% of the families with retired family heads.
In the United States, the family’s saving habit is influenced by the position of the family head as well. According to the findings of the 2019 study, families with self-employed heads were more likely to be able to save than families with heads who are retired.
11. Savings bondholders in families where the family head is between 45 and 54 years dropped from 19% in 2007 to 8% in 2019.
From 2007 to 2019, the percentage of households having savings bonds decreased substantially, regardless of the age of the family’s primary breadwinner. Families with bonds where the head of the household was 45 to 54 years old saw a more than half reduction in the number of bonds held. This demonstrates a reversal in the savings trend. A decline in the number of households saving via US bonds indicates that individuals have begun to place a greater emphasis on other types of saving rather than this particular one.
12. By 2019, 98.2% of almost all US families held a transaction account with just one in two of the families holding both a transaction account and a retirement account.
According to the data shown above, nearly all US households choose a transaction account above both retirement and bond accounts. Most likely, this is due to the fact that a transaction account serves as a gateway to other financial services, such as transferring money, storing information, and making payments.
13. 55% of the Americans saved money for retirement in a regular account compared to 54% who saved in a 401(k) plan.
It seems that ordinary savings accounts and 401(k) plans are the most common types of retirement funds, according to this data. The conventional IRA is the third most popular option, with 20% of investors opting for it.
Trends in the Values of Saving Deposits
The deposits in all American depository institutions have trends that are revealed by the statistics below.
14. The savings deposited in all American depository institutions was $9.16 trillion in 2018, $9.65 trillion in 2019, and $10.63 trillion by April 2020.
This demonstrates a consistent rise in the overall amount of savings that Americans have accumulated between 2001 and April 2020. During those three years, the month of April 2020 had the greatest number of deposits. From 1980 to the present, this has been the observed trend in the data. That Americans have acquired a practice of saving through time is shown by this statistic.
15. In 2019, 69% of Americans have less than 1000 USD savings in their accounts compared to 15% who have more than 10000 USD savings.
Despite the fact that Americans have a history of saving, the vast majority of Americans have relatively little money in their bank accounts at any one time. This implies that the vast majority of these individuals are ill-prepared for any future events. This may be due to the low levels of income relative to the high cost of living expenditures experienced by the bulk of the people in the United States.
16. 50.6% of women had no savings in their accounts compared to 38.29% by 2019 December.
However, despite the fact that 45 percent of those who took part in the 2019 poll claimed they had no savings, the vast majority of those who had no savings at all were women. According to the results of the 2019 poll, slightly more than half of the American women who responded did not have any savings, indicating that there were more poor women than poor males in the United States.
17. 22.94% of American women had less than 1000USD in savings compared to 25.44%.
Despite the fact that 69 percent of all Americans had less than 1000 USD in savings in 2019, there were more women than males who had less than $1000 in savings in that particular year. This demonstrates that there are gender inequalities between the male and female genders, indicating that more women have difficulty saving than males.
18. By December 2020 49% of American children had a savings account while 41% had a Piggy account.
Savings and piggy accounts were the most popular types of accounts among American youngsters, according to a survey. A bank account was the third most common kind of account, and a gaming/online account was the fourth most popular type of account, with 13 percent of the youngsters having one of these accounts.
Trends in Saving for Emergencies
In a poll conducted by Bankrate between December 30, 2019 and January 5, 2020, the results revealed the following information on how well Americans were prepared to deal with crises.
19. Almost 40% of Americans would borrow money to cover unexpected costs compared to 41% who would use their savings to cover the cost.
A significant percentage of people in the United States are not prepared to deal with an emergency situation such as a severe sickness or a vehicle breakdown.
Impact of COVID-19 on Savings
Each and every area of human activity was affected by Covid-19, including saving behavioural habits. The data presented in this section demonstrate the effect of Covi-19 on saving patterns over time.
20. In 2020 April savings reached a peak of 33.7% compared to 20.5% in January 2021.
(Source: Federal Reserve Bank of St. Louis)
The epidemic of Covid-19 resulted in significant savings among the people of the United States. April 2020 was the month with the greatest amount of savings. Individuals saved huge amounts of money as a result of the uncertainty about the future financial condition, hoping to utilize the money in the event of difficult times ahead. By the end of April 2020, the total amount of money saved in the United States had reached $6.414 trillion, with $3.93 trillion saved by the end of January 2021.
21. In the first two quarters of 2020, saving increased almost three times from 1.59 trillion USD in the first quarter to 4.69 trillion USD in the second quarter.
(Source: United States Congress Joint Economic Committee)
Following the outbreak of Covid-19, an extraordinary increase in savings was seen in the United States, with savings increasing by threefold between the first quarter of 2020 and the second quarter of the same year. This was prompted by the individuals’ fears of financial instability in the future, as well as their preparations for anticipated bad times in the future. In order to protect themselves from the potentially turbulent times that might occur as a result of the introduction of Covid-19, people made significant financial investments.
22. The GDP annualized in the first quarter dropped in the second quarter from 21.6 trillion USD to 19.4 trillion USD
In the first and second quarters of 2020, there is a clear correlation between the decline in GDP and the rise in savings. It implies that individuals have to refrain from spending in the manner measured by GDP in order to preserve their money. As a result, excessive savings were harmful to the economy since they resulted in a reduction in the amount of money in circulation.
Saving money is a habit that is influenced by a variety of variables. Age, gender, amount of income, saving objectives, and the current state of the world’s economy are all examples of such variables. Individuals of varying ages have a wide range of saving behaviors. Older individuals have a greater proclivity to save than younger ones. You will need to start saving more money at an earlier age than someone who is 20 years old if you want to be able to provide for yourself after retirement. If you start saving for retirement at the age of 40, for example, you will need to start saving more money than someone who is 20 years old in order to be able to provide for yourself after retirement.
In addition, it is clear that gender influences our saving habits in a number of different ways. When comparing men and women, most of the time, women have greater difficulties saving money. Disparities in incomes or obligations for paying daily living costs may be the cause of this situation. People with low income levels have very little left over to save, and as a result, their savings are little when compared to those with higher income levels. Individuals’ saving patterns are influenced by their objectives for saving as well as their saving habits. Those who are saving for a college degree will have different saving habits than those who are preparing for their retirement. People tend to conserve more money when the economy is in a poor state. In addition, universal issues such as the breakout of Covi-19 or a recession may serve as catalysts for people to boost their own savings. It should be emphasized, however, that unbalanced savings may have a detrimental impact on a country’s economic performance. The economy will suffer when individuals refrain from spending a large portion of their income. This means that some people will be unable to access the money because of decreased company sales, resulting in the decline in a country’s gross domestic product (GDP).
Q: What does Saving Money mean?
Answer: Depending on the context in which the term is used, the concept of saving money may be defined in a number of ways. To save money, it may be essential to look for ways to spend less money when you go shopping in order to achieve your financial goals. Purchasing whatever you want at the lowest possible price is also part of the process. According to this article, saving money is the process of putting aside a part of your earnings in an account to be utilized for other expenditures in the future.
Q: What are the benefits of saving money?
It is beneficial for a person to have money saved up in case of an emergency since it may be used in such a scenario. It is also feasible to use our money to pay for things that we may need in the future, such as a car or a home. If we lose our jobs, we will be able to use the money we have saved to pay our bills and fulfill our other financial responsibilities until we find new employment. Savings may be used to help with retirement planning, as well as for paying for vacations and other expenditures. Individuals who are able to preserve money are less likely to have financial problems.
Q: What is a Mutual Fund?
Mutual funds are financial pools in which many individuals pool their money, and this money is then used collectively to invest in an asset or groupings of assets, such as stocks, short-term debt, and bonds, in order to achieve the fund’s investment objectives. Mutual funds invest in a variety of assets, including stocks, short-term debt, and bonds, in order to achieve the fund’s investment objectives. In a professionally managed portfolio, investors buy shares in exchange for a return on their investment.
Q: What is a 529 savings account?
In response, a 529 savings account is a tax-advantaged savings plan that is intended to encourage parents to begin saving for their children’s college education while they are still in elementary or secondary school. In spite of the fact that the children are the beneficiaries, the account is handled by the parents themselves. The money in this account may be used to cover the price of books, tuition, and other educational expenses, as well as any expenses connected with pursuing an education.
Q: What is a 401(k) plan?
Employees may contribute to a 401(k) plan, which is a tax-advantaged account in which they can save money for their retirement. Employees choose the amount of money they want to set aside each month, and the money is deducted from their paychecks and deposited into the account on their behalf by the company.