If you noticed you’re not saving as much as you used to, you’re not alone. Bankrate released its annual Emergency Savings Report, and 73% of those surveyed said they were saving less due to high inflation, changes in job statuses or higher interest rates.They also found only 41% of those surveyed would use savings if a surprise bill came due. Instead, they would opt for borrowing money, putting it on a credit card and spreading the payments out over time or reducing their spending on other expenditures.This is a slight decrease year-over-year, according to Bankrate. In 2024, 44% of respondents would use savings for a surprise bill.Subscribe to Kiplinger’s Personal FinanceBe a smarter, better informed investor.
Save up to 74%
Sign up for Kiplinger’s Free E-NewslettersProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.Profit and prosper with the best of expert advice – straight to your e-mail.Emergency savings by ageNot surprisingly, baby boomers feel more comfortable about their savings than their younger counterparts:(Image credit: Bankrate)However, there’s a commonality among those surveyed: Two in three Americans share the concern they wouldn’t be able to cover their living expenses for the month if they encountered a job loss.Factors influencing people saving lessBankrate’s senior economic analyst Mark Hamrick notes, “The cost of living continues to rise, prompting more individuals and households to turn to credit cards when in a bind.”While credit cards do offer many perks, such as 0% introductory rates, cash back rewards and flexibility in budgeting, Hamrick cautions over reliance on them. “They are a terrific tool when used wisely and effectively. But with interest rates still high, we need to avoid a deepening debt burden which could make it more challenging to save.”Bankrate found these are the culprits preventing people from saving more money:(Image credit: Bankrate)Inflation continues to be a savings preventerTotal inflation rose to 2.9% in December 2024. The biggest drivers behind inflation were shelter, energy and food prices. In essence, prices continue to rise quicker than consumers can keep pace.And President Donald Trump’s immigration and trade policies are not inspiring confidence. Vanguard’s first-quarter fixed income outlook report concludes, “inflation progress to stall,” based on proposed policies from the president. Most notably, Trump wants to impose tariffs of up to 25% on imported goods from Mexico and Canada, with proposed tariffs also impacting goods from the European Union and China.If the president implements tariffs and some of his other trade policies, Vanguard says, “We expect modestly higher core inflation of around 20 to 40 basis points in the U.S. in 2025.”Budgeting becomes even more crucialWith inflation placing a squeeze on more budgets, the emphasis shifts on identifying unique ways to save more money. And the first step t
