Regional Consumers Continue to Adapt Spending and Saving Habits, WSFS Bank’s Annual Money Trends Study Finds

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Nearly four in 10 regional residents (38%) are spending more money now compared to last year, while only 21% in the region are saving more, according to a Money Trends study from WSFS Bank, the primary subsidiary of WSFS Financial Corporation (Nasdaq: WSFS). Half of respondents have heard of but never used savings tools like certificates of deposit (50%), while 51% said the same about high-yield money market accounts, signaling an opportunity for consumers to use higher interest rates more to their advantage.

Rising costs and inflation topped the list of why consumers are spending more (72%), followed by paying for emergency expenses such as repairs or medical bills (27%), paying off more debt (23%) and rising interest rates on credit cards and loans (23%).

The study, which surveyed 1,043 Greater Philadelphia and Delaware region consumers, measured spending and saving trends and the impact of economic conditions among adults ages 18-55.

Continued Economic Headwinds
Inflation and rising interest rates continue to have a major impact on regional consumers, with 72% spending more this year attributing it in part to rising costs and inflation.

When looking at spending categories, rising costs for essentials have left consumers’ wallets stretched thinner, with consumers spending more on groceries (60%), transportation (53%), utilities (50%) and housing (43%) than last year.

“While continued economic headwinds have impacted many consumers, there are adjustments you can make to help your money stretch further,” said Shari Kruzinski, Executive Vice President, Chief Consumer Banking Officer at WSFS Bank. “Some consumers are already adjusting as they’ve reduced spending on restaurant visits (42%), entertainment (34%), and travel and vacations (34%) from last year. While prices for essentials like groceries may have increased, you can still search for savings by looking for discounts from big box or discount retailers and eating at home.”

Changing Spending Habits
The current economic climate has resulted in regional consumers making changes to their spending behaviors to combat increased prices and rates.

Thirty-seven percent of regional consumers are slashing non-essential expenditures due to rising interest rates. The uptick in rates has motivated 30% of residents to reduce their credit card spending and debt, while an equal percentage are steering clear of loans altogether.

Two-fifths of respondents (38%) are using their debit cards more than last year. In contrast, while 30% of respondents increased their credit card usage, an almost equal 26% reduced it. Among those using credit cards less, 37% are focused on repaying existing debt, while others are wary of high credit card interest rates (33%) or are better able to stay on budget by using credit cards less (31%).

“Changing your spending habits can be difficult, but there are small things you can do that add up in a big way over time,” said Shelly Kavanagh, Senior Vice President, Director of Retail Delivery at WSFS Bank. “Taking a close look at your online and mobile banking can be a great way to quickly analyze your spending habits and adjust, like cutting unused subscription services or searching for better bargains on your regular purchases. It’s also important to monitor how you use credit and products like buy-now-pay-later carefully to avoid overextending yourself.”

While many consumers are pulling back financially, Gen Z (47%) led the way in increased spending compared to last year, outpacing Millennials (38%) and Gen X (30%). Gen Z, more than other generations, points to increased income (31%) and financial stability (29%) as leading reasons for spending more this year.

Refining Saving Techniques
Saving has become more challenging this year for many in the region, with half of residents (50%) saving less now than they did the previous year.

Of those saving more this year, 40% cited having specific savings goals as the reason why, while many are also driven by a desire to prepare for potential financial emergencies (39%) and to ensure future financial stability (36%).

Half of regional residents have heard of but never used certificates of deposit (50%), money market accounts (53%), high-yield savings accounts (47%) and high-yield money market accounts (51%). If they received an unexpected $10,000 to save or invest for a year, 34% of regional respondents said they would place it in a basic savings account, while 30% would deposit some or all of it in a checking account, underscoring many consumers’ unfamiliarity with higher-yield savings tools.

“Rising interest rates have certainly made it more difficult to save, but the good news is it creates the opportunity to earn more on your savings through certificates of deposit (CDs), money markets and high-yield money markets than there has been in quite some time,” said Kruzinski. “These savings tools tend to offer a higher interest rate than standard savings accounts and provide a safe way to earn interest that can really add up in this challenging economy. Setting specific goals is also a great way to keep yourself on track financially. If you feel you need more assistance, schedule an appointment with your local banker, who can help you map out your goals and how you will achieve them.”

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