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If you’ve seen your spending and saving habits change during the pandemic, you’re not alone. COVID-19’s impact on the economy has been worse than anything since the Great Depression, and many Americans have seen drastic changes to their finances spurred by unemployment, reduced wages, business closure and stay-at-home orders.
With consumer spending down since the pandemic came to the U.S., some Americans have found themselves contributing more to their savings than before. Record unemployment and reduced incomes, however, have forced others to readjust their budget, potentially forgoing savings as pressing needs such as food and shelter take priority.
To better understand how consumer spending and saving habits have changed since the onset of the pandemic, Experian surveyed a group of 377 adults in the U.S. to find out how their personal finances have changed in recent months. Read on for our insights and analysis.
Some Consumers Increased Their Saving During COVID-19
Two-thirds (66%) of those surveyed reported spending the same or less during the pandemic than they were this time last year. Nearly a third (30%) said they saw the greatest change to their spending on eating out and entertainment. Around a quarter (23%) said they saw their spending on nonessential purchases change, and 16% saw significant changes to their travel purchases.
When spending is reduced but a household income stays the same, it’s conceivable those extra funds could be allocated to savings. Though most respondents indicated that they have been spending less during the pandemic, only 28% said they were actually saving more during this time.
Broken down by employment status, respondents with jobs were predominantly the ones who were able to increase their savings. The survey found that 32% of those with full-time jobs reported saving more now than during the same period in 2019; 34% of those with part-time jobs said the same. Just 8% of unemployed survey participants said they were saving more, and 21% of retired respondents reported putting more money into savings in 2020.
Unemployment and Reduced Wages Cause for Reduced Savings Contributions
Though 28% of respondents said they’ve contributed more money to savings this year compared with the same time last year, 32% said the amount they’re saving hasn’t changed. A big share of respondents said they were either saving less than last year (20%) or not at all (19%).
When asked to explain why they had stopped or reduced their savings during this time, 21% said they had become unemployed during the pandemic and 38% said they had lost hours or wages due to the COVID-19 pandemic; 32% said it was due to increased everyday expenses; and the remaining 8% cited other reasons.
Nearly Half of Consumers Who Received Stimulus Check Put Some in Savings
In response to the unprecedented economic impact of the pandemic, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in March. Among other things, the bill included funding for a one-time cash payment of $1,200 to Americans making less than $99,000.
Many U.S. consumers who received a stimulus payment in 2020 reportedly used the money for a host of things other than essential purchases, including paying down debt and contributing to investments and savings.
When asked if they were able to use a portion or all of their stimulus check to contribute to their savings, 48% said they were able to save some or all of their check, while 33% answered that they weren’t able to save any. The remaining portion of respondents said they did not receive a stimulus check at all.
Majority of Respondents Canceled Large Purchases Due to Pandemic
In addition to reductions in everyday spending, some consumers boosted their savings by canceling large purchases as a result of COVID-19. More than half of those surveyed—54%—said they had canceled a large purchase, such as travel or home renovations, as a result of the pandemic.
Of those who scrapped a large purchase, 49% said they used the money they saved for essential purchases. Another 31% said they were able to put the money into savings, and 19% said they spent the cash on non-essential purchases.
Consumers Continue Positive Financial Behavior Despite Pandemic
Overall, the fact that some people have continued to prioritize savings emphasizes that—where possible—consumers are still making prudent financial decisions during the economic downturn. Though many consumers may not have the luxury of saving leftover money at the end of each month, the ones who do appear to be preparing for a rainy day—which, no matter your financial situation, is a wise idea.
Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.
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