Americans are feeling increasingly uncomfortable with their savings. Here’s why.

Americans are better off than a year ago with their emergency savings, but they’re feeling bad about it.

Inflation makes Americans more worried about their emergency funds.

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Inflation erodes people’s confidence in their savings.

More than half (58%) of Americans said they feel ‘very uncomfortable’ or ‘somewhat uncomfortable’ with the amount of emergency savings they have, according to a published Bankrate survey Thursday and conducted in early June, up 10 percentage points from a year ago. .

Some 23% of households surveyed said they had “no emergency savings”, down 2 percentage points from 25% last year. Encouragingly, this is one of the lowest levels seen in 12 years of polling, said Greg McBride, chief financial analyst at Bankrate.

A recent report from the Federal Reserve Board found that 68% of American adults said last year that they would be able to cover a $400 emergency with cash, savings, or a credit card. they could pay on the next bill. – a nine-year high. This figure was up from 63% in 2019, before the start of the COVID-19 pandemic.

Americans are better off with their emergency savings now than they were a year ago, McBride said, “but inflation, at its highest level in four decades, is eroding comfort levels as well than the purchasing power of the savings that people have set aside”.

The cost of living jumped 1% in May due to higher rents, gas and food prices, pushing the US inflation rate to a 40-year high of 8.6%, making harder for Americans to buy everyday items.

Indeed, many Americans said they had already dipped into their savings to cover rising prices. According to the Bureau of Economic Analysis, Americans had a personal savings rate of 4.4% in April, down from 6% at the start of the year. The savings rate expresses personal savings as a percentage of personal disposable income. “In other words, it’s the percentage of people’s income that remains after paying taxes and spending money,” according to the BEA.

McBride said successful savings are best achieved by setting up a direct deposit into a savings account each month. “That way the savings happen before you even think about it,” McBride said. “If you wait until the end of the month and try to save what’s left, very often there’s nothing left.”