By Aleksandra Vayntraub // SWNS
Four in 10 Americans couldn’t live off their cash savings for longer than four months, according to new research.
However, three in four (75%) think their saving habits will improve over the next 12 months.
A survey of 2,000 U.S. adults ages 18–58 with a savings account found nine in 10 have tapped into these accounts for emergency reasons since the pandemic began in March 2020.
Those emergencies include unexpected debt (16%), rising rent or mortgage payments (16%) and unforeseen medical bills (14%).
Commissioned by Laurel Road and conducted by OnePoll, the survey also found that although seven in 10 (71%) are satisfied with their current cash savings, there are factors they think can help them save even more.
Those include monthly savings challenges with incentives or prizes (60%), reminders for when their bills are due (52%) and a financial adviser or money mentor (52%).
Only 24% think having a higher income will help them save more money.
On average, people have added $23,474 to their cash savings accounts over the past year, and plan to add a similar amount in the next 12 months ($24,520).
While 42% anticipate withdrawing funds for necessary expenses, 46% will do so to have cash on hand, and 45% will tap into their cash savings account to pay off debt.
People are also using these accounts to save for their children’s education (45%), a new car (43%), retirement fund (40%) and a dream vacation (38%).
Looking ahead to 2024, people’s financial goals include saving for a down payment on a home or apartment (51%), setting a new budget (44%), starting an emergency fund (42%) and improving their credit score (36%).
“Our research shows over two-thirds (67%) are familiar with high-yield savings accounts, but haven’t yet opened one, suggesting there may be knowledge gaps in the benefits this type of account can offer,” Alyssa Schaefer, General Manager and Chief Experience Officer of Laurel Road added. “While 37% said they would use a high-yield savings account for their retirement fund, there are many short-term goals it can help with, as well, from saving up for a family vacation to financing a new car.”
When it comes to their financial habits, 46% rely on recommendations from family and social media, while 45% turn to financial advisers.
Many are keeping up their pre-pandemic savings habits, with a similar amount continuing to pay themselves first (59%), regularly set money aside for a specific purchase (55%) and invest (52%).
“With interest rates currently rising, saving can really benefit your wallet in the long run, especially if you choose a high yield savings account with a high Annual Percentage Yield (APY) over the traditional savings account,” said Alyssa Schaefer, General Manager and Chief Experience Officer of Laurel Road. “It’s important to do your research and find a bank that offers you the option to earn a higher return on your savings. Opening and funding a high yield savings account will allow you to watch your money grow as a result of compound interest, putting you even closer to achieving your financial goals.”
WHAT DO PEOPLE THINK WOULD HELP THEM SAVE MORE MONEY?
- Monthly savings challenges with incentives or prizes - 60%
- Reminders for when my bills are due - 52%
- A financial adviser or money mentor - 52%
- Self-budgeting tools or programs - 42%
- Discounts or coupons - 37%
- Having a higher income - 24%
PEOPLE’S FINANCIAL GOALS FOR 2024
- Saving for a down payment on a home or apartment - 51%
- Setting a new budget - 44%
- Starting an emergency fund - 42%
- Improving my credit score - 36%
- Consolidating or refinancing my debt - 33%
- Paying down or paying off my student loans - 31%
- Getting a higher-paying job - 30%
- Automating monthly payments - 24%
- Finding a money mentor or financial adviser - 21%
- Investing in an asset - 20%
Survey methodology:
This random double-opt-in survey of 2,000 U.S. adults ages 18–58 with a savings account was commissioned by Laurel Road between Sept. 13 and Sept. 21, 2023. It was conducted by market research company OnePoll, whose team members are members of the Market Research Society and have corporate membership to the American Association for Public Opinion Research (AAPOR) and the European Society for Opinion and Marketing Research (ESOMAR).