7 Tips for Hanging on to Pandemic Savings Gains
America Saves urges saving as spending picks up.
Article originally published on February 22, 2021 and refreshed on April 1, 2021.
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, consumers 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.
Following are 7 tips for building and maintaining personal savings.
Savings tip #1: 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.
Savings tip #2: Start small
More than 1 in 6 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 3 to 6 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.
Savings tip #3: 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.
Savings tip #4: Make saving automatic
Consider automatic payroll deductions or an automatic transfer from checking to savings. Arrange to have a specific amount transferred to your savings account every pay period.
Savings tip #5: 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.
Savings tip #6: Consider investments
For long-term goals, such as saving for a home or retirement, look into bonds, mutual funds, real estate and stocks.
Savings tip #7: Make a commitment to save
Take the America Saves savings pledge and create a simple savings plan to build and maintain your savings.
Looking for additional ways to jump start your savings? Visit a Zions Bank branch near you to speak with one of our experienced bankers.
Kallee Feuz is a Public Relations officer for Zions Bank.