Updated on Monday, May 3, 2021
Spring has arrived, and â€” with it â€” Americans are putting more toward their nest eggs. In fact, 49% of Americans added money to their savings in April, the highest in the 19-month history of the MagnifyMoney Savings Index.
Even though businesses are mostly open across the U.S. and vaccinations are helping people become more comfortable about getting back to normal activities, mask-wearing mandates amid the COVID-19 pandemic are still impacting spending. But the most recent round of economic impact payments (also known as stimulus checks) could help explain the bump in savings.
â€śMore people have decided to save the stimulus checks rather than using them to spend on services that have high levels of in-person interactions,â€ť DepositAccounts founder Ken Tumin says.
While it may not be too surprising to see record savings as we get closer to the end of the coronavirus pandemic, Aprilâ€™s numbers show a slight increase from pre-crisis savings levels. In fact, 44% of consumers reported adding to their savings in February 2020 â€” right before the pandemic shut down most of the U.S. â€” compared with the 49% who saved this April.
Additionally, Aprilâ€™s index follows the trend MagnifyMoney researchers have identified as a â€śstimulus effect.â€ť Each time economic impact payments have been distributed, the following month has seen an uptick in savings. The last time more than 40% of consumers reported adding to savings was February 2021 â€” just more than a month after the second round of stimulus checks.
However, fewer Americans received economic impact payments in the latest round because of tighter income requirements. While single filers making at least $80,000 a year and joint married filers making at least $160,000 a year did not receive stimulus checks, the MagnifyMoney survey found those in higher income brackets were still more likely to save in April.
Looking at the consumers earning more than $100,000 a year, 65% reported adding to their savings in April, compared with 36% of those earning less than $35,000. So while many of those who did receive stimulus checks may have contributed to their savings account as a result of that payment, annual income might be a better predictor when it comes to monthly savings.
The good news is, savings withdrawals fell in April, with just 17% of consumers reporting taking money out of their savings, compared with 20% in March.
If April showers bring May flowers, perhaps April savings will fund May cravings. Outside of general savings and emergencies, consumers named vacation as their top savings priority in April. Millennials (ages 25 to 40) in particular appear eager to get away, at 27%.
Older generations prioritized emergency and general savings more than their younger peers. In fact, 30% of Gen Xers (ages 41 to 55) and baby boomers (ages 56 to 75) named emergencies as their main savings goal, versus 24% of millennials and 16% of Gen Zers (ages 18 to 24).
On the other hand, younger generations have more savings goals toward which they are spreading contributions. Millennial and Gen Z consumers reported saving for new houses, new cars, weddings and babies at rates higher than the overall population surveyed:
â€śItâ€™s good to see that a decent share of Gen Zers are saving for important and costly milestones like weddings and babies,â€ť Tumin says. â€śThatâ€™s a positive sign that many Gen Zers may be successful in building savings rather than debt.â€ť
Every month, MagnifyMoney surveys consumers to find out whether they added money to their savings â€” and what theyâ€™re saving for. The results comprise the monthly MagnifyMoney Savings Index, which began in October 2019.
For the April 2021 edition, MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,213 U.S. consumers from April 14-21, 2021. The survey was administered using a non-probability-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 (defined as those age 76 and older), the sample size was too small to include findings related to that group in the generational breakdowns.