Americans appear to be making a conscious effort to spend less discretionary income in order to save more, a new study has found.
However, many Americans have not cut back on areas that could generate the most savings, Ameriprise Financial said Tuesday on the release of its multigenerational survey.
The survey found that although many Americans were spending less on smaller items, such as eating out, entertainment and clothing, fewer respondents were scaling back on big expense areas.
Only 24% of those with mortgage payments or rent said they had cut back, while 25% had reduced spending on college education for their family and 49% on vacations.
Respondents who had lowered these types of expenses reported average savings of $475 per month.
“It can be difficult to make adjustments to your expenses in order to save more, but the extra cash can really add up over time to make a big impact,” Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, said in a statement.
“Whether you’re saving for retirement, building an emergency fund or earmarking a stash for future health care costs, cutting back today in order to save more for tomorrow can be rewarding both financially and emotionally.”
Ameriprise Financial commissioned Koski Research to survey 3,002 employed Americans ages 25 to 67 with access to an employer-sponsored retirement plan (or with a spouse with access to such a plan) from Nov. 25 to Dec. 16. All respondents ages 25 to 49 had investable assets of at least $25,000, while those over 50 had at least $250,000 (including employer retirement plans, but not real estate).
The study found that millennials, those born after 1980, were more likely than both boomers and Gen Xers to be consciously cutting back on all 18 discretionary expense categories listed in the survey, including things like electronics and car payments.
However, the study revealed that younger Americans were still likely to take on a large amount of debt while trying to balance other financial goals.
Seventy-six percent of respondents who owned a car felt that their car payments had been a stretch, significantly more than older Americans who were paying off an auto loan. And 78% said their credit card or other miscellaneous bills had made them feel stretched financially.
Even more concerning, Ameriprise said, was that only 59% of millennials said they had a monthly savings plan, compared with 75% of boomers. In addition, just 57% with access to an employer-sponsored retirement plan were contributing enough to take full advantage of their employer’s match.