Consumers’ saving habits evolved quickly during the pandemic, survey suggests

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Despite economic hardships, people are finding ways to sock money away

The coronavirus (COVID-19) pandemic, which has gripped the world for much of 2020, has had some unusual economic fallout.

Besides throwing millions of Americans out of work overnight and reducing economic output by a third in the second quarter, the stock market is at record highs. Many consumers have adjusted their financial lives in ways that could help them weather the economic storm.

Despite the economic disruption, a Harris Poll, conducted for CIT Group, found that over half of U.S. consumers have increased their savings in the last few months. Young people seem to be doing the best job of socking away cash. Gen Z and millennial consumers are leading the way, with over 60 percent of both generations reporting an uptick in their savings rate. 

The pollsters also found that these good habits may continue once the pandemic is history. An overwhelming majority of respondents, 76 percent, said they are “somewhat likely” or “very likely” to save more than they usually do each month going forward.

"An increased emphasis on saving demonstrates consumers' motivation to adopt healthy financial strategies no matter what obstacles they may be facing," said Ravi Kumar, head of CIT's direct bank. "We're encouraged to see so many taking steps to prioritize preparing for the future in the midst of this unique time."

Healthy financial strategies

It’s not that consumers have stopped spending money; they’ve just shifted the ways they spend it. Since people have spent more time at home during the pandemic, consumers have increased spending on groceries, with a quarter getting food delivered more often than before.

Twenty-two percent are spending more money on entertainment -- things like books, games, apps, and subscriptions. When consumers do spend money, 44 percent are more likely to spend it online than before the pandemic.

So where does the savings come in? More than 40 percent of respondents say that they make fewer impulse purchases because they are working from home. Not having to go to the office may be making it easier for consumers to be more deliberate and give more thought to what they buy.

"Consumers have shown they can quickly pivot and adopt new strategies to meet their evolving lifestyles," said Kumar. 

Government data basically confirms these findings. Commerce Department figures show that the U.S. savings rate fluctuated between 33 percent in April and 19 percent in June. Before March, Americans were only saving about 7.5 percent of their income.

“We’ve never had this much savings,” Tom Porcelli, chief economist of RBC Capital Markets told USA Today last month. “It’s uncharted territory.”

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