Tuesday, 30 April 2024
Updated on Tuesday, October 5, 2021
Summer is over and kids are going back to school, which for many consumers apparently means it’s time to go back to saving. After a dip in savings contributions through the summer months, 42% of consumers added money to their savings in September.
“It is typical for consumers to save less during the summer months,” says Ken Tumin, founder of DepositAccounts. “Besides additional expenses for vacations, summer camps, AC, etc., summer can also be difficult for those in the education sector who may not receive paychecks then, so saving will likely take a back seat.”
September also marked a new low for savings account withdrawals, as just 13% of consumers took money out of their savings — the lowest percentage in the two-year history of the MagnifyMoney Savings Index. Whether folks are gearing up for the holiday season or looking toward the future, savings trends continue to shift.
For the second September in a row, consumers have bounced back from what may have been a summer of spending. After just 37% of folks added to savings in July, and 32% did in August, 42% of consumers contributed to their savings accounts in September.
A similar pattern occurred in 2020 when the percentage of those adding to savings took a little dip after May and didn’t recoup until September. Unlike last year, though, this month’s saving cohort is still a bit smaller than May 2021, which had 44% of folks saving. Coincidentally, both September 2020 and 2021 saw 42% of consumers adding to savings.
This September stands out as well for a small percentage of consumers withdrawing funds from their savings. Just 13% of folks took money out of savings this month, the lowest percentage in the Savings Index’s history. Last September, 21% of consumers reported savings withdrawals.
“Consumer confidence has been hurt by the recent rise in COVID-19 cases and by higher inflation, likely contributing to consumers withdrawing less from their savings,” Tumin says. “The end of the expanded unemployment benefits may increase savings withdrawals next month if many of those unemployed folks don’t find jobs.”
Consumers living on the coasts were more likely to add to their savings accounts in September than those in the middle of the country. Folks in New England — Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont — saved at the highest rate, with 48% of consumers adding to their savings. The rest of the regions making up the East and West coasts each had 45% of residents making contributions to their savings.
Those living in the East South Central region — Alabama, Kentucky, Mississippi, and Tennessee — had the lowest rate of savings contributions, with 36% of residents in these states adding savings in September.
In addition to geographic disparities, gender also may help predict whether someone added to their savings in September. Men were more likely to save money this month:
Having kids might inspire consumers to make a stronger effort to consistently build savings. Parents of children younger than 18 were more likely to add money to savings than consumers with adult children or no children. Of those with young children, 44% added to savings this month, compared with an average of 40% between those with adult offspring or none at all. Parents of young kids also withdrew from savings at the highest rate, with 15% taking out money (11% for parents of adult children and 12% for those without children).
Generationally, young consumers found themselves saving at a higher rate than older folks. Gen Z — those ages 18 to 24 — had the largest share of savers, with 46% adding to savings, while Gen Xers — ages 41 to 55 — were least likely to add to their savings (38%). However, Gen Z also had the biggest cohort of consumers who withdrew from savings this month at 17%.
Given the current state of the autos market with scarce inventory driving up car prices, it’s good to see so many Gen Z consumers adding to their savings — they might need more than they think. This generation’s most popular savings goal outside of general savings is a new car. Nearly a quarter — 24% — of Gen Zers say they’re saving for an auto purchase. Overall, just 14% of consumers name this as a savings goal.
Each generation has different primary savings goals outside of general savings, emergencies, and retirement:
The youngest generation’s consumers, perhaps naturally, were the least likely to report saving for retirement, with just 5% of Gen Zers saving for their golden years, compared with 30% of baby boomers — those ages 56 to 75. Millennials (ages 25 to 40) and Gen Xers report saving for retirement at notably higher rates than their younger peers, with 15% of millennials and 25% of Gen Xers putting money away for the future.
While Gen Zers have plenty of time to catch up, they should remember that time is on their side when it comes to planning for retirement, and it’s never early to start saving. Of course, the young consumers may have more pressing savings goals — like college, for which 21% of Gen Zers are saving, much more than other generations.
Gen Z is also more likely than other groups to report saving for a new house:
Overall, general savings, emergencies, and retirement continue to be consumers’ top savings priorities. After these goals, many consumers report saving for a vacation and the upcoming holiday season — which has the most attention from savers since November 2020.
Regardless of your savings goal, make sure your money is growing with interest even during the months you need to pause on deposits. Check out the best savings account bonus offers to boost your savings when you open a new 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 the monthly MagnifyMoney Savings Index, which began in October 2019.
For the September 2021 edition, MagnifyMoney commissioned Qualtrics to conduct an online survey of 2,050 U.S. consumers from Sept. 14 to Sept. 20, 2021. The survey was administered using a nonprobability-based sample, and quotas were used to ensure the sample base represented the overall population. All responses were reviewed by researchers for quality control.
We defined generations as the following ages in 2021:
While the survey also included consumers from the silent generation (age 76 and older), the sample size was too small to include findings related to that group in the generational breakdowns.
Source: https://www.magnifymoney.com/blog/news/consumer-savings-index/
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