If we are to be honest, most of us have not saved enough money. We claim that living expenses are too high, or we got wrapped up in too much debt, or our income is not quite where it needs to be in order to save what we want. Despite the reasoning and excuses, the fact remains that the vast majority of people simply do not save enough. After the great recession hit, many people realized that their savings were far from adequate, and rather than going through the burden of being left without an income and no emergency fund to fall back on, behaviors have started to change.
Fidelity recently conducted a “Five Years Later” survey of how confident people are in their savings and strategies. The bottom line is that more people are saving and being frugal with their money than they were just five years ago.
Back in the fall of 2007 the stock market hit record highs. In 2008 the housing market crashed and brought down the stock market with it. Finally in March of 2009 it bottomed out and has been slowly making a recovery since. But when the housing market crashed, the stock market did too, and employment became a victim. Millions of people were left without jobs. Fast forward to five years later and many people have gotten back to work, the markets are recovering, and people are learning from the past.
According to Fidelity’s survey 56% of people reported going from feeling scared five years ago, to prepared now. 42% of those surveyed increased the amounts of regular contributions to their retirement fund, and 55% now say they feel better prepared for retirement than they were before the crisis.
But beefing up retirement accounts is not the only reaction. 49% have decreased the amount of personal debt they hold, and 72% say they now have less debt than they did before the crash.
And they are better prepared for the next emergency. 42% have increased how much they have stored away in an emergency fund. Out of all those surveyed, 78% say that they are prepared and confident that the financial changes they have made now are permanent changes.
Changing your financial behavior is not really a hard thing to do. Without a financial crisis to scare you into making drastic changes it boils down to the willpower to get started, the dedication to keep going, and the resolve to make it a habit. The easiest way to make those changes is not to wait for another great recession, but start small. Increase your emergency fund contributions by $25 each month. The small changes are hardly noticeable, and the habit will form quickly. Once you make those new habits, it is often difficult to change back to your old habits. So until people get way too comfortable making a lot more than they need, it is likely the frugal mindset will stick around for a while.