It is fairly safe to say that almost every aspect of daily life has changed significantly due to the pandemic. This, in turn, has had a direct impact on almost all of our habits, including how we work, how we spend and even how we save. Some of this, of course, has to do with almost the almost unprecedented arrival of stimulus checks, which infused a great deal of capital into the economy, but it may also have to do with a change in people’s values when faced with what was quite literally a life-or-death experience. Here are three ways that saving has changed during the pandemic.
- Overall, people are saving more
In April of 2020, the personal savings rate hit 33%, which is calculated as the ratio of total personal savings minus disposable income. Although the rate tapered off significantly in the following months, it has never dipped below 12%, which is higher than the 10% average prior to the pandemic. In March 2021, the savings rate surged again to hit 26.6%.
- Saving more hasn’t meant spending less
Prior to the pandemic, most consumers spent anywhere from a few thousand dollars to several thousands of dollars a year on travel and entertainment. During the pandemic, however, the opportunities to spend these dollars decreased significantly. While some consumers may have directed these excess funds towards savings, plenty of consumers directed them towards purchasing products instead. Although there may have been a shift in how consumers were spending, it didn’t necessarily lead to a decrease in spending overall.
- Increases in savings have not been equal across the board
It is important to remember that in addition to generous stimulus checks and additional payments to families, the federal government also put a halt on student loan payments. This means that in addition to having extra income, many consumers also saw a significant decrease in their monthly bills. Those that were already doing well financially prior to the pandemic and did not see a drop in their income during it may have been able to make considerably larger contributions to their savings, while others were having to drain theirs. So, although there was a general increase in savings, there were some that made significant increases while others saw their savings wiped out completely.