Am I Saving Too Much for a Post-Pandemic World?

It’s understandable why many Americans would change spending habits amidst a global pandemic. Health and economic uncertainty make it difficult to spend your money, which is further compounded by caring for others or having concerns about your own health and wellbeing.

But money sitting in savings is not moving through the economy or helping revitalize it. A healthy economy needs money to be spent. To assist with the economic impact of COVID-19, the federal government offered a variety of stimulus checks.

The purpose of these checks was to help families handle the economic burden of the pandemic. But for some Americans, these checks became a nice cushion in their savings accounts. While it’s a perfectly normal instinct to sock away extra money when you have it, there are cumulative effects for the economy if not enough money gets invested, including diminishing growth and furthering economic inequality.

This does not mean you should go out and spend your stimulus or savings as quickly as possible. Instead, consider the following information, and consult with a financial professional before making any adjustments in spending habits.

How Much Is Being Saved?

A survey released in March 2021 shows that Americans have increasingly chosen to put away what extra money they have rather than invest. These habits spread across all income levels, with a 32 percent increase of wealthier Americans saving more, 17 percent more for those at lower incomes and an overall increase of 23 percent. Studies show that the total may amount to $1.8 trillion and is expected to increase to $2.5 trillion by the summer.1

Reasons for Saving

Economic concern is certainly a reason for saving, but in many cases, reduced spending is a result of the pandemic and adjustments to daily life. Reduced spending has been shown across every economic level, but mostly at the top, with 53 percent of wealthier Americans, 43 percent of middle income and 34 percent of low-income spending less.1

Among the above income levels, 86 percent of high-income Americans and 70 percent of middle-income Americans who stated that they are saving more have attributed it to changes in daily habits as a result of the pandemic.1 The opposite is true for low-income Americans, with 55 percent saving to protect their finances.1

Spending habits may readjust as a result of reduced restrictions, and as long as it’s safe, many Americans may return to their daily habits, subsequently moving some of the stagnant money held in savings accounts.

Job Loss and Making Ends Meet

For some Americans, the economic stimulus packages were not enough to help maintain their personal finances, especially in the face of job loss. The same study examined the measures taken by different economic groups to maintain personal finances after job loss.

These measures included:1

  • Reducing spending habits
  • Using savings & emergency funds
  • Accruing debt
  • Temporary work
  • Unemployment benefits
  • Borrowing money
  • Delayed bill payments
  • Additional public assistance

Low-income Americans were the majority in every measure, followed by middle income then high.1 Amongst these, debt accrual could be viewed as the largest long-term measure to impact personal finances, with 48 percent of low-income Americans accruing debt to pay bills.1 This can add additional financial pressure, as interest on debt compounds over time.

Revitalizing the economy is challenging without money flowing through it. And though spending habits may have adjusted to help with personal finances, it’s important to consider the implications. Economic growth will require spending, but one should only do so if their finances permit it.



  1. https://www.pewresearch.org/social-trends/2021/03/05/a-year-into-the-pandemic-long-term-financial-impact-weighs-heavily-on-many-americans/?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosmarkets&stream=business
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