More than a third of American adults are dipping into their savings accounts to help pay higher prices, new research shows.
Faced with high inflation, 36 percent of people say they withdrew an average of $617 from their savings in the first six months of this year, according to the latest Wealth Watch survey from New York Life. In the same time period, the US personal savings rate fell to 5.1% in June from 8.7% in December 2021, according to the most recent measure of the Federal Reserve Bank of St. Louis.
By age group, Gen Xers (people born between 1965 and 1980) have made the most of saving for everyday expenses: an average of $644, according to the survey.
More from Personal Finance:
30 Companies Helping Employees Pay Off Student Loans
Here’s how to save on groceries amid food price inflation
A typical job switch netted a salary increase of nearly 10%, the study found
High inflation has continued to squeeze consumer budgets, although it may be easing somewhat. The July measure, released Wednesday, shows an 8.5 percent increase in prices from a year ago, but not as high as the 9.1 percent year-on-year increase posted in June.
Earnings, however, are not keeping up: the latest reading of hourly wages was shown an increase of 5.2%. to July a year earlier, meaning that inflation has largely wiped out the increase in income.
“Relieve what your expenses are”
If you’re one of those who turn to savings to support day-to-day living, experts say it may be time to take a closer look at your income and expenses.
The ideal solution is to increase your income, said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York. “Optimizing the top line, how much you make, can really help,” he said.
If that’s not a viable option, you need to really scrutinize your spending, Boneparth said.
“Get up and screw up what your expenses are,” said Boneparth.
“A lot of people probably haven’t done this exercise,” he said. “Really go back and look at three to six months of your expenses and figure out what needs to stay and what needs to go.”
While drawing on savings to support your living expenses isn’t ideal, it’s better than taking on debt to do so, Boneparth said.
However, many consumers are accumulating credit card debt. Balances rose aa collective $890 billion in the second quarter, 13% more than a year earlier and the biggest annual increase in more than 20 years, according to the Federal Reserve Bank of New York.
[ad_2]
Source link
