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The tension between spending and saving is an experience that most people go through in their life. Recently, being straightforward with others about your intent to save more and spend less has become trendy, and arguably beneficial to consumers financially and psychologically.
The Gen Pop is traditionally on the more cautious side of personal spending. More than 50% say they manage their finances at least ‘pretty well.’1 Over the last three years, CivicScience polling shows a steady one percentage-point growth year-over-year among cautious spenders.2
Careful spenders typically create budgets to track spending, set aside savings, and ensure they don’t exceed their income. At this time, 76% of U.S. adults are at least ‘somewhat careful’ about budgeting their monthly income – with 39% who say they budget their income ‘very’ to ‘extremely’ carefully each month. Eleven percent do not budget their income at all.
While more people appear to be budgeting, fewer people overall are saving money. Year-over-year tracking indicates an increased percentage of consumers are saving 0% of their monthly income. It is possible that the purpose of budgeting could be less about saving money and more about preventing overspending in an inflated market. And that is impacting all aspects of consumer behavior. For example, 32% of the Gen Pop admit to having turned down an invitation to socialize for budgeting or financial reasons in the last 30 days. This rises to 44% among the most careful budgeters.
Take Our Poll: Have you had to turn down going out with friends because of your personal financial situation in the past year?
Budgeting Habits
Who are the budgeters among us? Budgeting habits tend to correlate with income. The more money a person earns in a year, the more likely they are to have some kind of budget in the first place. However, people in lower-income brackets (under $50K) over-index in likelihood to budget ‘extremely carefully.’ Middle- and upper-income earners tend to budget less carefully in comparison.
The method of budgeting varies quite drastically. Using an online banking app is overall the most popular form of budgeting among those who track their spending (29%), but this method is more likely to be used by people who do not budget carefully. Keeping a mental list of spending is also common, although clearly not as effective as other methods, as displayed by the data below.
Vigilant budgeters are more likely than others to keep their spending in check by using pen and paper or a budgeting app (outside of their banking app).
Join the Conversation: How would you describe your budgeting skills?
Motivating Factors
Additional CivicScience data show that consumers are driven to budget their income by specific financial goals, as well as their perspective on the economy. Individuals trying to buy a home in the next year or two are very likely to say they budget their income ‘very carefully.’ Following financial news and markets, as well as ownership of a stock or bond portfolio, tend to be characteristics of more careful budgeters.
Aligning with previous comparisons to income, the data underline that wealthier Americans with more liquid cash are less likely to budget than lower-income Americans. Their awareness of the need to manage spending and saving is present, but the actual need to carefully track each expense is diminished.
As mentioned, the percentage of consumers saving income for an emergency, retirement, or a major purchase is down. At the same time, paying attention to the allotment of one’s monthly income is up, meaning Americans are aware of their current finances but possibly unable to set aside money for the future. With newly lowered interest rates and a surge in economic sentiment ahead of the holidays, budgeting behaviors could change in the months ahead.
