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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit 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 age
Not surprisingly, baby boomers feel more comfortable about their savings than their younger counterparts:
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 less
Bankrate'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:
Inflation continues to be a savings preventer
Total 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 crucial
With inflation placing a squeeze on more budgets, the emphasis shifts on identifying unique ways to save more money. And the first step to that approach is to take a fresh look at budgeting.
Some of our favorite budgeting apps not only keep track of your finances, they can help you set savings goals and stick to them. They can also identify spending patterns you might need to course correct to optimize savings. Two of our favorites are:
- Quicken's Simplifi: It allows you to set a personalized spending plan that aligns with all of your other savings and investing goals. The projected cash flow tool is also pivotal in helping you set realistic savings goals, while adjusting spending behaviors to meet those benchmarks.
- Monarch: If you work with an investment advisor or plan to, this is app allows you to share your accounts with advisors. Having a real-time depiction of your finances can help create more accurate savings and investment goals.
Find better savings solutions
The Federal Reserve cut interest rates three times by the end of 2024. Although savings account interest rates took a dip as a result, you'll still find many savings options to grow your money.
High-yield savings accounts can help you earn a healthy rate of return while giving you access to your cash when you need it. A couple of things to keep in mind: Some banks impose monthly fees if you don't maintain a minimum balance, so pay close attention to any restrictions. Also, high-yield savings accounts come with variable rates, meaning if the Fed cuts rates, it might affect how much you can earn.
Another savings option is a certificate of deposit (CD). CDs do well if you don't mind parking your money away for a few months to a few years while achieving shorter-term savings goals. Best of all, the rate you lock in remains the same throughout the term.
That said, CDs aren't the best solution if you need easy access to your money at all times. When you withdraw money from a CD before the term ends, it can close the account, and the withdrawal fees could negate any interest earned. If you want more flexibility, consider a no-penalty CD.
The bottom line
Bankrate's survey shows many Americans are struggling to save more money due in large part to inflation. And with President Trump's proposed policies on adding tariffs to imports, it could lead to higher costs on everyday goods.
While you can't control prices, you can control to some degree how you manage money. Having the right budgeting app can provide a fresh perspective while keeping your savings goals a primary focus. And choosing the right savings or CD vehicle can ensure you reach your savings goals. That way, if an unexpected expense hits, you won't have to go into debt for it.
Related content
-
The Most Popular Apps for Retirement Planning in 2025A J.D. Power survey ranks retirement planning apps based on customer service and satisfaction. Does your financial app make the cut?
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
This Is How Life Insurance Can Fund Your Dreams NowBeyond a death benefit, life insurance can provide significant financial value and flexibility through 'living benefits' while you are still alive, helping with expenses like education, business ventures or retirement.
-
Potential Trouble for Retirees: A Wealth Adviser's Guide to the OBBB's Impact on RetirementWhile some provisions might help, others could push you into a higher tax bracket and raise your costs. Be strategic about Roth conversions, charitable donations, estate tax plans and health care expenditures.
-
How to Plan Your First International Trip After RetirementRetirement paves the way for a world of exciting (and intimidating) experiences. An overseas journey can be an ideal way to embrace this new phase of life.
-
My First $1 Million: Retired Magazine Editor, 70, Boise, IdahoEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
From Mortgages to Taxes to Estates: How to Prepare for Falling Interest RatesAs speculation grows that the Federal Reserve will soon start lowering interest rates, now is a good time to review your financial plans for housing, estate, taxes, investing and retirement to make the most of potential changes.
-
This Is How Lottery Winners Build Lasting Legacies, From a Financial ProfessionalWinning a massive lottery jackpot, like the recent $1.4 billion Powerball, requires seeking immediate legal and financial counsel, protecting your identity and winnings and planning your legacy.
-
Is It Worth Upgrading to the iPhone 17?The iPhone 17 is here. Learn what's new, where the best deals are and whether it's worth the switch.
-
I'm an Investment Strategist: This Is How the Fed's Next Rate Move Could Impact Your WalletInterest rate cuts might be coming, which could affect everything from your credit card debt to your mortgage. It's smart to prepare now — here's how.
