Americans Are Saving More and Feeling Better About Finances, but Inflation Remains a Persistent Stressor

While 74% of Americans feel at least moderately in control of their finances this year, inflation has caused 19% to cut back on necessary spending

A national survey from Discover revealed that 71% of Americans have more than $500 in savings, up 4 percentage points from 2022. On a similar trajectory, 32% of respondents saved up to $29,999 this year, compared to 27% last year.

However, consistently high inflation and rising debt detracted from these positive trends. The survey found that 53% of respondents feel stress about their everyday expenses and 76% have some level of anxiety about their financial situation.

“While it’s heartening to see that Americans are generally saving more, there are still opportunities for improvement,” said Rachael Olson, director of product strategy, Discover Personal Loans. “Given continued financial stress, it’s a good time for Americans to make efforts to improve their financial situation by taking steps in addition to saving. Inflation and debt both significantly impact how and what people save, and it’s important to explore tools such as debt consolidation to make your money work for you.”

Despite improved financial confidence, inflation is still top of mind

Though 74% of Americans feel moderately or fully in control of their finances this year, many still feel the effects of inflation. In fact, a majority (58%) said inflation is the top contributor to their financial stress and more than half spent less as a result. When asked where they reduced spending due to inflation, nearly 20% of respondents said they cut back on necessary spending, in particular groceries (82%) and standard personal care (59%).

Additionally, 40% of Americans cut back on luxury spending due to inflation. Of these individuals, 76% said they cut back on dining out at restaurants/bars, 70% cut back on shopping for things such as clothes, beauty products, personal goods and technology, and 57% said they cut back on travel.

On the other hand, more than one-third (36%) either increased spending habits or did not adjust their spending habits at all over the past two years as a result of inflation.

Americans generally feel better equipped to manage debt, although it remains a factor for some

Credit card debt increased for nearly one-quarter (24%) of Americans over the last two years, with only 12% citing a decline in their credit card debt.

Americans who experienced increased credit card debt are eager to tackle it. When asked what their main priority is when managing their debt, 44% said paying it off quickly is most important and 11% said they are prioritizing lowering their monthly payments.

“Despite a consistently tough macroeconomic environment, consumers’ outlook on debt could slowly improve this year if they are able to strategically plan and save,” said Olson. “Consumers should consider the many tools at their disposal, including consolidating debt through a personal loan, to help build a path toward financial freedom.”