More than half of Americans surveyed say they are saving up to an average of $185 per month by consciously cutting back on eating out, entertainment and clothing, according to the Financial Trade-Offs study released today by Ameriprise Financial (NYSE:AMP). The survey found encouraging insights that indicate people are making a conscious effort to spend less discretionary income in order to save more. However, it also uncovered that many Americans haven’t cut back on areas that can make the biggest impact on their savings. The multi-generational study surveyed Americans ages 25 to 67 with at least $25,000 in investable assets and access to an employer-sponsored retirement plan.*
The survey found that while many Americans are spending less on smaller items, fewer respondents said they are scaling back on big expense areas such as mortgage payments/rent (24% of those with this expense have cut back), college education for their family (25%) and vacations (49%). However, cutting back on these types of expenses is likely to generate the most savings – up to an average of $475 per month according to these respondents.
“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,” said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. “Whether you’re saving for retirement, building an emergency fund or earmarking a stash for future healthcare costs, cutting back today in order to save more for tomorrow can be rewarding both financially and emotionally.”
Millennials rein in spending but fail to save diligentlyThe study found that Millennials (born after 1980) are more likely than both Boomers and Gen Xers to be consciously cutting back on all 18 discretionary expense categories listed in the survey. This includes things like electronics (69% of Millennials say they’ve cut back on this compared to 57% of Gen Xers and 45% of Boomers) and car payments (32% of Millennials have scaled these back – more than any other generation surveyed).