The Election is Changing How We’re Spending Money
A recent study by The Ascent says that 43% of Americans are preparing financially for the upcoming Presidential election.
26% are increasing their savings
Bankrate said that the average American household had $8,863 in savings in 2018. A recent poll from The Associated-Press NORC Center for Public Affairs Research finds that during the pandemic, 45% of Americans are setting aside more money than usual.
A survey from Savingforcollege.com reported that despite the COVID-19 pandemic, saving for college has not changed drastically and college savers are still on track. In the survey, 67% of respondents have not made any changes to their 529 plan contributions, and 15% have even increased the amount they are contributing.
15% are paying off their loans
In July, the Federal Reserve reported that the amount of consumer revolving credit, which is mostly credit cards, decreased another $24 billion in May.
However, only 10.9% of federal borrowers are repaying federal student loans right now, according to financial aid expert and publisher of SavingforCollege.com, Mark Kantrowitz. In March, due to the COVID-19 pandemic, President Trump signed the CARES Act, which allowed federal student loan borrowers a chance to stop making payments on qualified federal student loans. During this payment pause, no monthly student loan payment is due and loans are not accruing interest. The payment pause was automatic, so borrowers did not need to request it as they would with a typical deferment or forbearance.
Other survey results included:
- 25% are spending less
- 22% are adding to their emergency funds
- 10% are changing their investment strategies
- 6% are refinancing mortgages
- 4% are buying and selling a home
Steps to improve your financial health
Even if you still have a job, who knows what will happen in a month or two. So, start building an emergency fund with half a year’s salary. An emergency fund provides cash flow to cover unexpected expenses and can sustain you during a period of unemployment.
Cut spending to get the money to pay down your high-interest student loans and credit card debt. This will get you to your debt-free goal quicker.
Get a side gig to earn extra money. An added benefit of a part-time job in the evening and weekends is you’ll have less time to spend money.
Save more. Mark Kantrowitz, publisher of Savingforcollege.com, says “Save a fifth of your income for the last fifth of your life.” Most people save only 7% of their income for retirement, which is not enough. You should also save for college, even though student loans and parent loans are an option for paying for college. It is cheaper to save than to borrow.