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Don't Get Burned: It's a Smart Saver's Summer

According to a new survey conducted by Vanguard, a leading investment management company, a significant majority of Americans—71%—are gearing up to modify their savings strategies this summer. This survey, which encompassed responses from a representative sample of U.S. adults, highlights an increasing awareness of the importance of maintaining healthy savings, particularly in the face of economic uncertainty.

However, despite this positive shift towards prioritizing emergency savings and flexibility, many individuals are facing challenges that may hinder their ability to save effectively. The survey revealed that 28% of respondents feel that time constraints are a major barrier, with another 28% indicating that they feel they lack sufficient funds to save. Additionally, 24% expressed uncertainty about where to even start their savings journey.

Matt Benchener, Managing Director of Vanguard's Personal Investor business, stated, "There is a clear desire to save, but plans don't always translate into action since many consider creating a savings strategy to be daunting." This sentiment reflects a broader trend where individuals recognize the necessity of saving but struggle with the practicalities of implementing a solid plan.

Further emphasizing the urgency to save, the survey also identified that 67% of participants are unsure about their ability to adhere to a savings plan due to market volatility. Concurrently, 63% of respondents anticipate that they might exceed their budget on essential expenditures, such as groceries and utility bills, or encounter unexpected costs like medical expenses and home maintenance. Alarmingly, 64% of participants admitted they do not fully grasp how fluctuating interest rates can impact their savings.

Despite these hindrances, a large portion of respondents continues to rely on traditional bank savings accounts, which yield an average interest rate of only 0.42%, according to the FDIC. In comparison, Vanguard's Cash Plus Account is currently providing a competitive annual percentage yield (APY) of 3.65%, which is more than eight times the average yield of conventional savings accounts. This notable disparity highlights the potential benefits of exploring alternative high-yield savings options.

Kate Byrne, Head of Vanguard Cash Plus Distribution, remarked, "It's hard to make a change, but it's important to start somewhere. There is no minimum amount required to begin saving, so you should ensure that every dollar saved earns the returns you deserve by leveraging a high-yielding savings vehicle." In addition to superior yields, the Cash Plus account provides features such as FDIC coverage, ease of access for bill payment and direct deposits, and compatibility with payment apps like PayPal and Venmo, making it a practical choice for the modern saver.

For those looking to optimize their savings strategy this summer, Vanguard emphasizes the necessity of saving with intention and utilizing the resources available to them. The firm also offers various liquidity solutions, including money market funds and ultra-short-term bond funds, catering to diverse financial needs.

The survey was conducted by Big Village among a sample of 1,009 U.S. adults aged 18 years or older, highlighting the practical expectations and concerns of American savers as we enter the summer season. With many individuals acknowledging the barriers to saving, it is imperative to address both the actual and perceived obstacles that may deter them from achieving their financial goals.

Ultimately, as the economic landscape continues to evolve, it is essential for consumers to remain informed and proactive about their savings strategies. Vanguard encourages all individuals to take charge of their financial well-being and explore high-yield savings options to maximize their returns this summer.

For more information on the Cash Plus account and other savings solutions offered by Vanguard, visit vanguard.com/cashplus.