Americans are better positioned with their emergency savings now than they were a year ago, but they feel uncomfortable.
Inflation is consuming people’s confidence in their savings.
More than half (58%) of Americans said they feel “very uncomfortable” or “a little uncomfortable” with the amount of emergency savings they have, according to a Bankrate poll released Thursday and conducted early June, 10 percentage points more than last year. .
About 23% of households surveyed said they “had no emergency savings,” 2 percentage points less than 25% last year. Encouragingly, this is among the lowest level seen in 12 years of polls, said Greg McBride, chief financial analyst at Bankrate.
A recent report from the Federal Reserve Board found that 68% of American adults said last year that they could cover a $ 400 emergency with cash, savings or a credit card they could pay when they ‘should pay the next bill. – a maximum of nine years. This increased from 63% in 2019, before the COVID-19 pandemic began.
Americans are better positioned with their emergency savings now than a year ago, McBride said, “but inflation in a maximum of four decades is eroding the level of comfort as well as the purchasing power of savings that people have put it aside. “
The cost of living rose 1% in May due to rising rental prices, gasoline and food, which pushed the U.S. inflation rate to a 40-year high of 8, 6%, which made it difficult for Americans to afford daily items.
In fact, many Americans have reported that they have already sunk into their savings to cover rising prices. According to the Office of Economic Analysis, Americans had a personal savings rate of 4.4% in April, down from 6% earlier this 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 is left after paying taxes and spending money,” according to the BEA.
McBride said successful savings are best achieved by setting up a direct deposit into a savings account each month. “That way, the savings happen before you think about it,” McBride said. “If you wait until the end of the month and try to save what’s left, very often there’s nothing left.”