Americans Are Saving Less

Americans are saving a smaller share of their disposable income. The personal saving rate fell to 4.1% in August, its lowest level since November 2022, as consumer spending grew faster than disposable income. For millions of families, a thinner cushion means one car repair or medical bill can be enough to knock a budget off course.

Households are stretched

• Recent data from J.D. Power shows that just 34% of consumers are financially healthy.
• Many are already making tradeoffs: 27% have cut back on groceries or skipped meals, 18% have borrowed from family or friends, and 9% have missed rent, mortgage, or utility payments.
• Only 63% of adults could cover a $400 emergency using cash, savings, or a credit card paid off at the next statement, per the Federal Reserve. That share hasn't moved in three years and is still below its 2021 high of 68%.

Why a cushion matters

Emergency savings do more than cover a single bill. They keep a car repair, weather disaster, or medical expense from becoming a long-term setback. Research from the Aspen Institute Financial Security Program found that households who have at least $5,000 in emergency savings were almost four times less likely to tap into retirement savings.

As Mattie Duppler told Bloomberg last week, families who once relied on pandemic-era savings to absorb rising prices are now bridging the gap with credit cards and dwindling savings.

How to start building financial health

Most families know that having a financial cushion matters. The harder part is finding room in the budget to build one. Small, consistent savings can help, but so can access to safe financial products, clear information, and tools that make it easier to save automatically and build financial stability over time.

Financial institutions, policymakers, and educators all have a role to play in making those tools easier to find and use.

Longer-term policies can also help families build assets over time. Trump Accounts, for example, provide eligible children born from 2025 through 2028 with an initial federal contribution that families and employers can supplement. As Mattie Duppler wrote in The Well News, efforts that help families start saving earlier can complement the day-to-day work of building financial resilience.

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