American attitudes toward money may be permanently altered by the pandemic, according to one financial expert.
“We’ve seen a lot of changes in financial behavior from the pandemic,” Mariel Beasley, the principal of the Common Cents Lab at Duke University, recently told Yahoo Finance Live. “We’ve seen actually a big increase in people desiring to save more money. Emergencies are on the brain.”
Stressing that 2020 has had a positive influence on people’s financial habits, Beasley shared that the research lab found that people were 15 times more likely to build their emergency funds and save more as a result of the pandemic.
Adding to findings was an “overall increase in the savings rate,” she shared, explaining that household savings rates increased involuntarily as lockdown measures prevented Americans from spending on luxuries like travel and entertainment.
The savings rate was 9.4% in August — the latest data available from the Bureau of Economic Analysis — which is above pre-pandemic levels. The rate hit a historic high of 33.8% in April of last year when many Americans got their first round of stimulus checks and much of the country was shut down.
The hardship lessons of the pandemic have left an indelible impression on Americans, and many, at least in the short term, have been inspired to save to safeguard their finances from the next emergency, Beasley said.
“It'll be really interesting to see as hopefully things eventually are able to go back to normal," she said, "how much of these habits they stick at and how much change.”
Beasley said there’s also an opportunity for financial organizations “to think about why we have this increased motivation to build savings” and tailor their products accordingly.
Even without financial institution involvement, Beasley shared one “basic tenant” of saving and that is to “set up an automatic savings transfer that is timed with your payday,” so the money can be saved before it is spent.
“Having a transfer to an emergency savings, savings account, or something that you’re able to [deposit] money out of your paycheck immediately...is a really effective way to build savings that...will automatically refill back up after every pay period,” Beasley said.