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  • 📉US Personal Savings Rate Drops to 3.7% in 2023: What's Behind the Decline?

📉US Personal Savings Rate Drops to 3.7% in 2023: What's Behind the Decline?

Understanding the Factors Contributing to the Drop and Tips for Boosting Your Savings Rate.

Author

Don Ranalli
April 10, 2023

👋GM Valued Readers,

According to recent data from the Bureau of Economic Analysis (BEA), the personal savings rate in the United States fell to 3.7% for 2023. This represents a sharp drop from the 16.8% savings rate number that was recorded in 2020

A savings rate refers to the percentage of disposable income that is saved rather than spent. A declining savings rate is generally not a good sign for the economy as it indicates that consumers are spending more than they are saving. This trend is particularly worrisome in a country where personal debt levels are already high.

The causes of the declining savings rate are complex and multifaceted. One factor is likely the strength of the economy, which has encouraged many Americans to spend more freely. Additionally, stagnant wages, rising healthcare costs, and a lack of affordable housing may be making it difficult for people to save.

Whatever the causes, it is important for Americans to remember the importance of savings. Saving money can help people weather financial emergencies such as job loss, medical bills, or unexpected home repairs. Furthermore, saving money can help people achieve long-term financial goals such as buying a home, paying for education, or retiring comfortably.

🚀To boost your own savings rate, consider taking the following steps:

1. Set a savings goal: Determine how much money you want to save and by when. Having a concrete goal can make it easier to stay motivated.

2. Automate your savings: Consider setting up automatic transfers from your checking account to a savings account.

3. Cut back on expenses: Look for areas where you can cut back on spending such as eating out, entertainment, or shopping.

4. Consider a side hustle: A part-time job or gig can provide extra income that can be put directly into savings.

We hope that this newsletter serves as a reminder of the importance of saving money. Remember, a healthy savings rate is crucial for financial security and stability.

Happy Investing Fellow Defions

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