Saving and Spending Habits of Americans
One third of Americans believe in a slow methodical pace at saving and investing, "slow and steady wins the race." 6 in 10 admit their financial planning needs improvement and the biggest barriers to getting on the right financial track is a lack of time and confusion about what to do. I personally don't understand why time can't be devoted to personal financial planning. Without clearly defined financial goals, a strong emergency fund or comfortable retirement is far less likely to come to fruition.
Some other interesting results in the survey include what changes had been made regarding financial planning the past three years. 22 percent say they have either taken money out of a retirement account and 22 percent have also said they have stopped or reduced the amount of money they put into a savings account.
This comes as no surprise as the past three years we have come out of the worst recession since the Great Depression. In fact, the recession was so bad it is now referred to as the "Great Recession." So it's no surprise that people have dipped into their retirement account for immediate needs as unemployment hit a high of 10 percent a few years ago.
The Great Recession is the same reason people either reduced or stopped saving altogether. Another factor that has put a damper on savings is that interest rates are so low. CD Rates and other deposit rates are so low there is no incentive to save. The best CD rates right now on 1 year certificates of deposit are around 1.00 percent. The best savings rates and money market rates are also at 1.00 percent or just below 1.00 percent.
These are all factors that contribute to lower savings by Americans but the biggest reason they've either reduced or stopped savings is unexpected expenses. 52 percent of Americans say unexpected expenses are the most likely reasons to cause them to delay saving money. Generations also differ on where they are with saving.
When asked if they have a lot of catching up to do with their savings, Generation X has the largest percentage of respondents saying they have a lot of catching up to do. Of Generation Xers, 32 percent of say they have a lot of catching up to do while only 13 percent of the MatureGen say they have to catch up.
You'll probably see that you're not much different from others in your generation with your saving and spending habits. You can view Northwestern Mutual's entire survey here: Planning & Progress 2013.
You can search for the highest CD rates at banks by using our rate tables here: CDRates.RatesORama.com.
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