After COVID restrictions lifted, many of us made up for lost time by shopping, leading to a trend known as “revenge spending.”
Now, with uncertainty surrounding the economy, it appears many are turning in the opposite direction and putting a focus on saving.
According to a report by the Bureau of Economic Analysis released last week, the personal savings rate increased to 4.9% in April from 4.1% in January, which shows how much Americans are saving their money after the pandemic and in the face of ever-changing tariff policies.
Barry Glassman, president of Glassman Wealth Services, said he wouldn’t call what is being seen “revenge saving,” but instead believes we are seeing more “prudent saving.”
“Much like when we live a bit in excess on vacation and eat a bit too much, maybe when we get back, we hit the gym more and pay a bit more attention to our health,” Glassman said. “I think that’s what’s going on … with a bit more fiscal constraint and savings.”
Glassman said a variety of things are fueling this, among them are dramatic stock market swings, higher interest rates in the D.C. region and cuts made to the federal workforce.
“Things are more expensive, so those vacations that you may have taken a few years ago after the pandemic, or the car that you wanted, or even eating out at restaurants, things are a bit more expensive,” he said.
Another driver here, according to Glassman, is an increase in how much money you can make by not spending your money.
“With saving interest rates paying 4% or more, I think there’s a greater incentive for people to park money because they’re earning some money on those dollars set aside,” Glassman said.
While Glassman said he isn’t a big TikTok user, he has noticed a rise in young people who use it encouraging their followers to save, spend less or be more frugal with money.
“It’s something among young people that’s going on right now that has definitely shifted a corner to more constraint in spending, to the point where it’s now fashionable to not spend,” Glassman said.
He said his first tip is to store money in interest-bearing accounts, such as a savings account. In most cases, checking accounts don’t earn that much. He said aim for accounts with interest rates of 4%.
Glassman also recommends having emergency savings that you could live off for three to six months, but he said you shouldn’t feel like you need to save that much money overnight.
“I would just make sure to start with something, even if it’s 1% of your paycheck, and you’re able to increase that, let’s say, in six months, to 2% or 3%,” he said.
Whether to save heavily also should depend on a person’s debt, Glassman said, because saving while also making minimum payments on a credit card balance with an interest rate of 23% is not a great strategy.
“It’s really important that people look to balance the amount that they’re looking to save as well as pay down existing debts,” Glassman said.
Glassman said establishing a budget is also helpful when trying to save money, and many financial planning apps make it much easier to see your spending picture and make necessary cuts.
“When people see where their money is going, usually they’ll learn a lot from it, and behavior will change,” he said.
Get breaking news and daily headlines delivered to your email inbox by signing up here.
© 2025 WTOP. All Rights Reserved. This website is not intended for users located within the European Economic Area.
