According to a recent survey of 1,000 Americans for Bankrate’s monthly Financial Security Index, 65 percent of U.S. adults say they have a reason to cap their monthly spending. This figure has remained relatively steady for the past few years, but the reasons that Americans limit their spending have significantly changed. For the first time in four years, the top reason given was not income stagnation. Instead, the most prominent explanation was the need to save more money. 30 percent of all survey respondents cited the need to save more as most important, 25 percent pointed to stagnant income as the top reason, 15 percent listed worries about the economy, and 10 percent cited excessive debt.
The survey further broke the results down by generation, finding that age played a significant factor in the reasons for limiting spending. Millennials, defined as ages 18-35, were most likely to cite the need to save, with 48 percent listing it as their top reason. Within the millennial generation itself, older millennials (26-35) differed significantly from their younger cohorts in their responses. 22 percent of Americans in this age range cited too much debt as the top reason not to spend, reflecting the huge burden of student loans.
Older Americans were much more likely to cite stagnant incomes as their top motivator against spending, with 35 percent of adults aged 62-70 naming this reason. This trend is more striking at ages 71 and above, with 58 percent of that age group.
Though Americans are recognizing the need to save, and are listing it as a higher priority, lack of savings remains an extremely prevalent issue. A 2016 GOBankingRates survey of 7,000 Americans found that 34 percent have no savings and 35 percent have less than $1,000. Most financial advisors recommend having an emergency fund with enough for three to sixth months of living expenses, but the vast majority of Americans are ill-prepared. Americans recognize the need to cut spending and increase saving, but this has not always translated into adequate financial preparedness. Financial literacy is also an issue.