Since the financial crisis of 2007, the personal savings rate in America jumped from less than 2.5 percent in the mid-2000s to 8.1 percent today, according to CNN. Millennials are saving their money more than ever before, to the point that some financial analysts blame them for slowing down the economy. One of the main reasons why people are saving more money is that there are a lot more options for those who want to save, apart from the traditional savings accounts banks offer.
The rise of saving apps
Smartphones have changed how people do everything, including saving. There are hundreds of apps designed to make it easier for people to save, from expense tracking apps, to reminders, to those that teach you how to be more frugal so you can save more. They allow you to track your savings in real-time, which makes it easier to set and achieve savings goals. For example, an app like Chime is a mobile-only bank that has automatic savings features. When you use Chime, you can choose to automatically transfer a percentage of your earnings to savings when your paycheck comes in.
More people are choosing money market accounts
Most banks now offer several types of savings accounts, and one of the most popular right now is the money market account. The reason why people are choosing money market accounts is that they have much higher interest rates, but still retain the flexibility and convenience of regular savings accounts. According to the FDIC’s weekly report for October 21, 2019, the average interest rate for money market accounts was 0.16 percent, and 0.09 percent for regular savings accounts. However, a money market account typically requires a higher daily balance and minimum deposit. Banks use deposits into money market accounts to invest in short-term, low-risk and highly-liquid investments like government bonds, certificates of deposit, or other similar investments. When choosing the best money market accounts, customers need to compare interest rates, fees, and any restrictions on the account, especially with regard to minimum deposits and the ability to remove funds.
Cryptocurrencies as a saving option
Some people believe cryptocurrencies are a soap bubble that is on the verge of bursting, while others are predicting an unprecedented growth for them. However you choose to relate to them, you have to accept that they are an existing reality that people are investing millions in. While most people invest in cryptocurrencies for trading purposes, some do so as a saving option, with the hope that they will appreciate in the future. For example, those who purchased Bitcoin in the early stages have already received excellent returns, given that it’s currently worth more than 10 times what it was back then.
Saving money can be compared to a hobby. It comes naturally to some people while others have to practice harder to be good at it, but the increase in saving options available allows people to attain and exceed their saving goals.