Two-thirds of Americans have less in their savings accounts than they did last year, according to a new KeyBank survey. If your balance is shrinking, too, you’re not alone — and there are clear reasons why this is happening.
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Here’s a look at why bank balances are shrinking, and how you can turn things around if this is true for you.
Why Americans’ Savings Are Dropping
Several factors are forcing Americans to dip into their savings more than usual this year.
Inflation Is Eating Into Budgets
“Inflation is a real factor that is coursing through Americans’ lives, independent of income level,” said Dan Brown, EVP and director of consumer product management at KeyBank.
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Student Loan Payments Are Back
Anyone who had federal student loan payments paused during the pandemic now has to resume payments.
“Those payments are being reported to credit card agencies, so that’s something that is now more pressing,” Brown said.
Buy Now, Pay Later Can Add Hidden Costs
“Buy now, pay later can be a great tool in people’s toolboxes when used properly, but while most loans are generally interest-free, that is not true all of the time,” Brown said. “If not properly managed, that can actually increase your financial obligations.”
Smart Moves That Actually Boost Savings
The survey found that 32% of Americans are making weekly trade-offs to spend less so that they can save more for the future, and 25% are making daily trade-offs — yet, savings account balances keep shrinking. Instead of relying on small sacrifices, Brown recommended these strategies:
- Seek personalized advice: “There may not be a one-size-fits-all strategy here,” he said. “Find digital tools to help with budgeting, find tools to help with subscription management and talk to advisors.”
- Automate savings: “I always tell people to pay themselves first,” he said. “When you get your source of income, set things aside before you start thinking about other expenses.”
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This article originally appeared on GOBankingRates.com: 3 Big Reasons Americans’ Bank Accounts Are Shrinking — and How To Fix It
