Money News: People Planning To Shift Savings Approach Starting Summer

71%, of Americans say they plan to shift their savings approach this summer to prioritize emergency savings and flexibility, according to a new Vanguard survey. People are tightening their belts, as concerns about tariffs, inflation, job security and market volatility have prompted many consumers to pare back their spending and increase their savings, financial experts say. The U.S. personal saving rate — the percentage of disposable income that U.S. households save, after they pay taxes and spend money — has risen sharply this year, reaching 4.5% in May, according to Bureau of Economic Analysis data released Friday. That is slightly down from 4.9% in April, but up significantly from 3.5% in December. Some consumers may be changing their financial habits from so-called “revenge spending” — the trend of splurging after the pandemic — to “revenge saving,” as they focus more on building savings and spending less. “No buy” challenges are going viral on social media platforms like TikTok and Reddit, as consumers vow to limit their discretionary spending, cut back on subscriptions and travel, and rebuild their savings.  Financial advisors typically recommend consumers aim to set aside three to six months’ worth of living expenses as a cash cushion. But you might benefit from having more in some circumstances; for example, if you’re a one-income household or your pay is variable, experts say. Having ample cash reserves improves overall financial wellbeing, according to Vanguard researchers.

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Source: CNBC