Economic pressures are impacting American households in different ways. For some, that means finding alternative avenues to finance everyday essentials like groceries, such as shopping online or using buy now, pay later services. For others, that means holding back on making big purchases or saving that tax refund instead of spending it on new clothes or a beach vacation.
One thing is clear – many Americans continue to rely on savings to purchase essential items and pay bills.
Among U.S. adults with savings, new CivicScience data show that a total of 65% have tapped into savings for purchases so far this year. This is nearly equivalent to last year’s number (64%). Year-over-year, far more consumers continue to use their savings to purchase essential items such as groceries and gas, and to pay utility and medical bills, than to make major purchases or travel. Standing out from last year, more Americans in 2023 are using savings to pay medical bills in particular (up two percentage points since June 2022), coinciding with many avoiding medical visits in the first place due to cost.
In short, further analysis shows a total of 42% of respondents with savings/investments have used money from savings this year to either buy essential items, pay bills and living expenses, or make other purchases outside of travel and major purchases.
Unsurprisingly, income is a major factor in the likelihood of using savings for common purchases and payments. Households earning $50K or less annually are the most likely to use savings for essential items (37%), utility bills (36%), and medical bills (30%), whereas top earners ($150K and above) are the least likely to do so. On the other hand, higher earners ($150K+) are the most likely to dip into savings for travel (19%) and major purchases (19%).
How do savings relate to overall financial health? A quick look at savings activity (not including retirement accounts) finds that 82% of the population has some form of liquid investible assets in a bank or investment account. However, nearly 1-in-2 U.S. adults with savings report they’re currently sitting on less than $25K total in savings and investments. A closer look at quarterly tracking suggests that Americans have less in savings in Q1-2023 compared to Q1-2022. The percentage of those with more than $100K in savings has fallen, while those with less than $10K climbed. Meanwhile, those reporting no savings at all has stayed the same from Q1-2022 at 17%.
So while savings serve as a bolster through tough economic times, continued inflation may be exacting its toll on savings accounts.
Looking ahead, CivicScience tracking shows that the majority of U.S. consumers don’t expect to grow their savings any time soon – April data show 32% expect they’ll have the same amount as today and 23% foresee having less six months from now (n=3,940).
Likewise, a similar majority expect they’ll still be tapping into savings in the months ahead. Twenty-two percent say it’s ‘very likely’ they’ll use savings to make purchases and payments in the next six months, and a larger 31% say it’s ‘somewhat likely.’
The good news from the data is that the percentage of Americans who have used and expect to use savings for payments and purchases has largely remained static since 2022 – but that is also the bad news.
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