Impact of Inflation? Saving Money Is a Priority for More Americans Now Than in 2022

(GoBankingRates) - Economic uncertainty can be a great motivator for getting your financial house in order — and the events of the last year are the proof.

A new GOBankingRates survey of more than 1,000 adults found that more people are prioritizing saving money in 2023.

The study found that 36% of respondents would like to learn more about saving money than any other financial topic. That’s an increase of seven percentage points over 2022 when 29% gave the same answer.

The reason could be as simple as rising yields, which have made FDIC-insured accounts legitimate alternatives to investing for the first time in recent memory. But the tumultuous events of the past year have probably played a larger role.

“In light of recent financial trends, including inflation, recession, and high interest rates, it’s natural that people are increasingly prioritizing saving money today compared to last year,” said Baruch Silvermann, financial expert and CEO of The Smart Investor. “This shift can be attributed primarily to the prevailing financial uncertainty that has emerged.”

People Rightfully Worried When the Good Times Stopped Rolling

When the pandemic subsided, people embraced a reopened world and an economic boom ensued — but it was short-lived.

“In 2021, the global economy rebounded from the COVID-19 pandemic, with declining unemployment rates, increased consumer spending, and soaring corporate profits,” Silvermann said. “Stock markets reached record highs, signaling optimism. However, in 2022-2023, the financial climate transformed. Rising inflation driven by supply chain disruptions and increased demand, falling stock markets and raised interest rates to combat inflation, disrupted the global economy. The landscape shifted from recovery to uncertainty, with challenges affecting economies worldwide, leaving an atmosphere of volatility and a need to navigate the changing financial climate.”

Financial Anxiety Can Be a Great Motivator To Save

The deteriorating conditions that defined the last year might have triggered a national shift in mindset that spurred a renewed interest in saving.

“In times of financial uncertainty, as we see these days, people tend to change how they handle their money to reduce risks,” Silvermann said. “The first thing they do is focus on saving more money. They understand the importance of having some extra cash to deal with unexpected expenses or losing their job. So, they make it a priority to save money and create an emergency fund as a safety net.”

Spending Less Paves the Path To Saving More

So, if people can find ways to sock money away when uncertainty compels them, why can’t they do it when times are good? Because it’s easier to justify frivolous spending when your back isn’t up against a wall, as has been the case for so many during the era of post-COVID-19 inflation.

“Consumers also take a closer look at their spending habits and start prioritizing essential expenses,” Silvermann said. “They may cut back on things like eating out, entertainment, vacations, or luxury items that are not really necessary. Instead, they put that money towards savings or paying off debts. This way, they become more financially resilient and prepared for any challenges that may come their way.”

Emergency Funds Offer Security in the Face of Simultaneous Crises

Nerve-rattling calamities like the kind that Silvermann described would have been bad enough if they happened one after the other — but they happened all at once, and their cumulative effect might have been enough to shake non-savers out of complacency.

“Most earners today have witnessed at least three events that should have been once-in-a-lifetime,” said Liz Raad, co-founder of the eBusiness Institute. “A huge financial crisis, a devastating pandemic, and yet another European war that has the potential to trigger a host of other crises and micro crises. In 2023, people are bound to be much more aware that we live in an age of uncertainty than they would have been just 15 or even five years ago. And that’s without counting in the AI revolution, whose scope we haven’t even begun to process. Not to mention that all of these events have had a formative effect on young earners, setting off what can even be tentatively described as a cultural shift of sorts.”

The Recession That Never Came Might Finally Deliver

Rising interest rates and high prices are undoubtedly responsible for some of the increased interest in saving money, but nothing can frighten people into getting into financial shape like the threat of a job-killing recession.

Despite widespread predictions that a downturn was imminent, the economy dodged the bullet in 2022. But now, a consensus is building that 2023 will be the year.

Laura Adams, MBA, a personal finance expert with cited her organization’s research that found 72% of Americans believe the U.S. will enter a recession in the next 12 months. That reality spurred 38% to invest more conservatively, so it stands to reason that the threat of a downturn also convinced them to put saving back on the front burner.

“Stock market volatility and recession fears are likely why consumers are saving more than last year,” Adams said. “Having more emergency money in the bank helps prepare for potential hardships and reduces financial stress.”

By Andrew Lisa
May 17, 2023

Methodology: GOBankingRates surveyed 1,045 Americans aged 18 and older from across the country between May 1 and May 4, 2023, asking thirteen different questions: (1) Have you ever followed money advice from a well-known expert?; (2) What is your primary source for money (personal finance) advice?; (3) What would be your LEAST likely source for money (personal finance) advice?; (4) In the past year where have you sought out money (personal finance) advice? (Select all that apply); (5) Would you ever follow money advice you found on Social Media?; (6) Would you ever follow money advice from a popular mogul/influencer? (i.e. Mark Cuban, Dave Ramsey, Suze Orman, etc.); (7) What would you like to learn the most about in order to improve your personal finances?; (8) What do you look for in your sources for personal finance information? (Select all that apply); (9) Have you bought a book on personal finance/money advice in the last year?; (10) Have you subscribed to a podcast on personal finance/money advice in the last year?; (11)In an economic downturn where do you invest your money? (Select all that apply); (12) Where do you feel most comfortable investing your money?; and (13) Where do you get retirement advice from? (Select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.


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