The Impact of Inflation on Spending and Saving
With inflation rates high, a recent study has indicated some trends as a result.
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As inflation increases, consumers across the region and nationwide are feeling its effect.
A recent WSFS Bank Money Trends study highlights just how much. The study surveyed 1,500 Greater Philadelphia and Delaware region consumers and 1,500 consumers nationally between the ages of 18-55.
According to the report, more than nine in 10 Americans (91%) are worried about affording a price increase over the next year, while their regional counterparts (93%) agreed.
With the level of concern this high, it has sparked changes in many of their plans for spending and saving, and in some instances, has delayed significant life milestones like buying a home or having children.
For Latinos, about 35% said buying a house is more of a priority with rising prices and inflation. Consequently, about 37% of Latinos noted that changing careers is now more of a priority due to rising prices and inflation.
Regionally, four in 10 (41%) residents feel the local economy is strong in 2022, while about 33% of residents nationwide believe it.
The low confidence in the economy has motivated many to increase their savings, with more than half of respondents saying they are doing so to ensure future financial stability.
“While the impacts of inflation and rising rates are certainly challenging to consumers’ budgets, it’s a good sign that many are recognizing the importance of saving to build toward future purchases and overall financial well-being,” said Shari Kruzinski, Executive Vice President and Chief Customer Officer for WSFS Bank.
Of those who are increasing their savings, under half (46% regionally; 45% nationally) are doing so by cutting back on non-essential purchases, and slightly less (43% and 42%, respectively) are proactively setting financial goals.
With the holiday season coming up, many savers are also keeping in mind their holiday spending.
Regionally, 43% plan to buy gifts from local businesses. Gen Zers are leading the way in holiday spending over other generations, with 31% planning to spend more this year on gifts than last year.
“While this holiday season is expected to be challenging, local businesses have an opportunity to lean on their partnerships, tap into the spending power of Gen Zers, create unique customer experiences and special offers, and bolster sales through an increased desire to shop local,” Kruzinski noted.
WSFS has provided four tips to help stretch your spending power and build savings:
- Review and Adjust Your Spending Habits: Knowing that finding deals on everyday items is more difficult, take a look at your non-essential spending and cut back where you can.
- Bank Your Money: Try to keep your spending levels where they are now and save extra money in your paycheck when the opportunity presents itself.
- Reset Your Goals: In this current economic environment, it’s very important to stay on top of your finances, and leverage available experts.
- Rethink Your Holiday Spending: If you are planning to stay home this holiday season, spending your gift budget locally can be an effective way to both spread holiday cheer and support local small businesses.