Experts concerned about savings habits with increasing spending

SALT LAKE CITY, Utah – The tough economy of the past year has turned many Americans into saving machines. Now that the pandemic appears to be loosening its grip, more consumers are willing to spend, which is worrying financial experts.

You can see it at the airport, in stores, restaurants and various other businesses. Traffic resumes. In fact, one in five Utah small businesses surveyed in April 2021 in the US Census Bureau’s Small Business Pulse Survey said business has already returned to normal.

“People are starting to spend money on the things they opted out of last year,” said Ismat Mangla, director of content for MagnifyMoney.

Mangla was track saving habits and find the number of people who have saved has fallen from 46% in February to 36% in March.

The 10% drop was the first it has seen this year.

“The economic impact payments that a lot of people received in March probably also made them feel a little more comfortable,” she said.

In this tax season, the IRS estimates the average refund at $ 2,967. So, will these refunds be spent or saved?

A bit of both, said Simon Zhen, senior research analyst for

“We have found that most of the people who get tax refunds intend to save them or use them to pay off their debts,” Zhen said.

Zhen said he hopes those of us who are not yet on a solid economic footing will continue to save and spend our extra dollars on items we really need, instead of splurging on things that we really need. new cars and great vacations.

“Who knows this could happen?” Zhen asked. “Times are still very uncertain at the moment.”

If the pandemic has taught us anything, he said, it’s that putting money away for the unforeseeable is crucial. Yet only 22% of consumers currently save money in an emergency, according to MagnifyMoney’s latest Consumer Savings Index.

“Often we say three months is the minimum amount,” Mangla said. “I would say, now I think it makes sense to have even 6 to 12 months of living expenses set aside in an emergency savings fund.”

Building emergency economies

If six months of living expenses are more than you can manage now, even $ 1,000 will help cover an unexpected bill without borrowing money.

When KSL-TV spoke to Certified Financial Planner Jenie Connors of Diversify Wealth in 2019, she recommended cutting spending a bit here and there first. It means going through your bank account.

“Come in and watch it line by line,” Connors said. “Where is my money going?”

Maybe it goes to an unused gym membership, a six dollar cup of coffee every day, or a membership for an app you haven’t opened in months.

“There are many tools that do this for you,” said Shane Stewart of Deseret Mutual Benefits Administrators, another certified financial planner at the time.

He recommended apps like Mint that can connect to your bank and categorize your spending. Others, like the Trim app, can find unused subscriptions and help you cancel them.

Another app, Joy, lets you rate purchases as “happy” or “sad” to help you avoid them in the future.

“Everyone has their own opinion on how to track these (expenses),” said Stewart, “The important part is this – you have to track it.”

When we spoke to certified financial planner Shara Young about setting up an emergency savings account in 2018, she recommended setting up your checking account, so that it automatically transfers money to your savings account. emergency once a week or once a month. You can also ask your employer to directly deposit money into the fund directly from your paycheck.

“You don’t even have to think about it,” she said.

Young said the best savings goal is one that’s realistic for you.

“Can you make a quarter?” Can you start with that and stay focused? Young said.

For example, if you save $ 25 per week, within 10 weeks you will have $ 250 hidden in your emergency fund. Even at $ 10 per week, you will save $ 500 in a year.

“The consistency of doing it like a habit – every time – will help you build this up as quickly as possible,” Young said.

Where to find $ 10 or $ 25 per week?

At the time, Ann House, of the Personal Money Management Center at the University of Utah, said that you can gradually reduce your spending.

“You don’t do something overnight,” she says. “You withdraw a bit.”

Let’s say you eat out five times a week. House recommended starting to cut expenses by bringing lunch to work one day a week instead.

“Then you take it down a notch,” House explained. “I’ll bring my lunch in two days.”

Experts have warned that people should only use their emergency funds for, well, emergencies. A killer deal on a 4K TV or a trip to Disneyland is not eligible.

If you get a large tax refund, you’ve given the federal government an interest-free loan. However, if you change your withholding tax so that your repayment is close to zero, that’s money you can use all year round to pay off debt, invest, or save.

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