Americans are better off with emergency savings now than they were a year ago, but they don’t feel comfortable.
Inflation is eating away at people’s confidence in their savings.
More than half (58%) of Americans said they were “very uncomfortable” or “somewhat uncomfortable” with their emergency savings amounts, including a Bank Rate Survey released on Thursday and carried out in early June, up 10 percentage points from a year earlier.
About 23% of households in the survey said they had “no emergency savings,” down 2 percentage points from 25% last year. Encouragingly, this is among the lowest readings in 12 years, said Greg McBride, Bankrate’s chief financial analyst.
A recent report by the Federal Reserve Board found that 68% of US adults last year said they could cover a $400 emergency with either cash, savings, or a credit card that they can use when their bill falls due could pay the next bill – a nine-year high. That was a 63% increase in 2019, before the COVID-19 pandemic began.
Americans are better off with their emergency savings now than they were a year ago, McBride said, “but inflation, which is at a four-decade high, is eroding the level of comfort as well as the purchasing power of the savings people have set aside.”
The cost of living rose 1% in May on higher rents, gas and food prices, pushing the US inflation rate to a 40-year high of 8.6%, making it harder for Americans to afford basic necessities .
In fact, many Americans have reported that they have already drawn on their savings to cover rising prices. According to that Office of Economic AnalysisAmericans had a personal savings rate of 4.4% in April, up from 6% earlier in the year. The savings rate expresses personal savings as a percentage of disposable personal income. “In other words, it’s the percentage of people’s income that’s left over after they’ve paid taxes and spent money,” according to the BEA.
McBride said that successful saving is best achieved by making a direct deposit into a savings account each month. “That way, the savings happen before you even think about it,” McBride said. “If you wait until the end of the month and try to salvage the rest, there’s often nothing left.”
https://www.marketwatch.com/story/inflation-is-eroding-the-comfort-level-americans-have-about-their-cash-savings-11656009614?rss=1&siteid=rss Inflation is “eroding the level of comfort” Americans have with their cash savings