SEVEN TIPS FOR HANGING ON TO PANDEMIC SAVINGS GAINS
America Saves Week Urges Saving as Spending Picks Up
Americans have been saving more than ever during the pandemic. Despite job losses and widespread economic impacts, the personal savings rate (the percentage of people’s income remaining after taxes and spending) was at 13.7% at the end of 2020. That’s nearly double pre-pandemic savings levels, which hovered in the 6-8% range over the past decade.
Locally, Utahns are socking away record amounts, signaling a statewide savings boon. Zions Bank saw deposits across its Utah and Idaho footprint grow by $4.87 billion in 2020, a 30% increase from 2019.
It’s typical for the savings rate to spike during a decline in general economic activity. In the current environment, a reduction in spending combined with federal stimulus payments have helped some families save more. However, a vaccine-led economic recovery and resurgence in spending could threaten savings gains made during the pandemic.
In honor of America Saves Week, Feb 22-26, Zions Bank offers seven tips for building and maintaining personal savings:
Reset old spending habits. As life returns to normal, don’t fall into old spending traps. Instead, reset pre-pandemic habits with new, money-saving routines. Maybe that means bringing your lunch to work a few days a week or skipping the gourmet cup of coffee.
Start small. More than one in six Americans — up to 46 million people — have relied on their emergency savings during the pandemic, according to a CNBC/SurveyMonkey poll. Most experts recommend having three-to-six months’ worth of living expenses on hand for emergencies. If this seems overwhelming, start with a more attainable goal of $1,000 in emergency money.
Pay yourself first. If you wait to see what's left over, you are less likely to save. Determine in advance how much money you plan to keep on deposit each month. If you receive a raise, increase the amount of money deposited into your savings account.
Make saving automatic. Consider automatic payroll deductions or automatic transfer from checking to savings. Arrange to have a specific amount transferred to your savings account every pay period.
Pay down debt. Chip away at monthly credit card debt by adding a modest amount to your monthly minimum. This can add up to thousands of dollars in interest savings. Paying down excess debt can also help boost your credit score, saving you money in the form of lower interest rates on future loans.
Consider investments. For long-term goals, such as saving for a home or retirement, look into bonds, mutual funds, real estate and stocks.
Make a commitment to save. During America Saves Week, you can take a savings pledge and create a simple savings plan to build and maintain your savings.