Americans Save Less in Weak Economy

Millions of Americans aren't setting aside money for emergencies or following budgets, a new report says.
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BOSTON (TheStreet) -- When it comes to saving their pennies for a rainy day, millions of Americans are facing drought conditions, victimized by the bad decisions that come with a lack of financial literacy.

Personal savings

-- disposable income minus personal outlays -- was $304 billion in March, compared with $332.2 billion in February, according to statistics released this week by the U.S. Commerce Department's Bureau of Economic Analysis. Personal saving as a percentage of disposable personal income was 2.7% in March, compared with 3% in February.

Aside from the March dip, a new look at consumer savings habits by the

National Foundation for Credit Counseling

is far more sobering and perplexing.

The portion of adults who lack non-retirement savings has increased from 63% in 2007 to 67% in 2010. However, 30% -- the statistical equivalent of more than 68 million people -- have no savings. Only 24% are saving more now than they did a year ago because of the weak economy. Nearly 39% Generation Y adults, more than any other age group, reported having no savings. Of those with no savings, one in four say that if faced with an emergency, they would charge that expense to a credit card or take out a loan.

The NFCC, the nation's largest nonprofit credit counseling network, conducted its 2010 Financial Literacy survey with

Harris Interactive

(HPOL)

in March. The results of the annual report were extrapolated from a pool of 2,028 respondents. Debt continues to be a budget buster according to the NFCC report.

Two in five adults said their household carries credit card debt from month to month, and more than 11 million have debts of at least $10,000. Twenty-eight percent said they're habitually late in paying bills.

One-third of adults, approximately 75 million people, don't put any household income toward retirement. That's a 5% increase from the 2008 survey, but unchanged from 2009.

More than two in five adults keep close track of their spending, an increase since 2007. More than half still lack budgets, and more than 11 million adults don't monitor their overall spending and don't know how much they spend on food, housing and entertainment.

Nearly two-thirds of adults have not ordered a copy of their credit reports in the past year and nearly one-third don't know their credit scores.

A slight "silver lining" does show amid the gloomy findings, according to NFCC Chief Executive Susan Keating. A larger portion of respondents gave themselves higher grades on their knowledge of personal finance this year. In 2009, 41% gave themselves grades of C, D or F, with only 34% falling into that category in 2010.

"Sometimes it takes hitting bottom to facilitate change, and this is apparently what has happened with many American consumers," Keating says. "Tracking spending and creating non-retirement savings are two of the building blocks to financial stability, and the recession has served as a harsh reminder of this to millions who have been affected by the economic downturn."

-- Reported by Joe Mont in Boston.