Americans are becoming a bunch of tightwads.
Despite economic improvements, consumers increasingly favor saving over spending, according to Gallup’s April 3-6 Economy and Personal Finance poll, and individuals’ preferences aren’t tied to whether they expressed financial concerns or confidence in the economy. It seems we’ve simply had a change of taste.
That change didn’t come without reason — the financial crisis effectively force-fed that mindset to Americans — but it’s interesting that people remain hesitant to spend, even as market conditions have improved.
Of course, this study suggests why things haven’t improved more: People have to spend money to feed an economy.
The Save-Spend Battle
Make no mistake, saving should be a priority for everyone, because without savings, you set yourself up for taking on debt. In that way, it’s encouraging to hear that 64% of millennials report enjoying saving more than spending (33% said they’d rather spend), but at the same time, that statistic has some significant implications.
Millennials (ages 18 to 29) are in a life stage that typically involves a fair amount of spending: furnishing apartments, socializing, upgrading to a professional wardrobe — all of these actions drive economic growth. On the flip side, the next generation (30- to 49-year olds) has the greatest preference for spending, with 37% saying they enjoyed spending more than saving, as opposed to the 61% who prefer saving. A lot of spending happens in those years, too. (It’s also important to note that the survey’s margin of error is ±5 percentage points, so differences between age groups may or may not be significant.)
Overall, 34% of Americans reported they most enjoy spending, and 62% favored saving. Those sentiments have been trending apart for a while — it was 37%/60% last year, 35%/62% in 2010, 44%/53% at the start of the financial crisis and 45%/48% in 2001. We’ve always preferred saving, but not by this big a margin.
Why Are We Saving More?
It’s incredibly important to have an emergency fund in place and to plan properly for retirement, and Americans haven’t always been great at doing those things. Also, just because Americans enjoy saving more doesn’t mean they’re not spending. The poll was one of sentiment, not action.
Regardless, it’s an interesting question. Feelings certainly aren’t the only thing holding people back from spending. High levels of consumer debt, particularly student loan debt, are doing plenty to suppress people’s ability to spend. And in the end, given that saving is crucial for your financial health, shouldn’t you enjoy doing it? You can’t expect a lot of success if you don’t get excited by the idea of watching your savings grow.
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