Americans dip into savings to cover necessities as pandemic surges on

  • 53% of U.S. respondents say their financial situation has worsened since the pandemic began 
  • 38% of respondents say the amount of money they have in savings has decreased since the start of the pandemic 
  • Of those who had to dip into savings at some point in 2021, the majority did so to pay for bills (60%) and necessities (59%)

We’re about to enter our third year of the Covid-19 pandemic, and while many Americans have been able to improve their financial situation, there’s a growing population of consumers whose financial picture has worsened. 

According to a new study conducted by Qualtrics on behalf of Credit Karma, 53% of Americans say their financial situation has worsened since the start of the pandemic. This was especially true among millennial respondents and those with household incomes (HHI) below $50k. According to the study, 64% of millennials agree their financial situation has worsened, compared to 48% of Gen Z, 54% of Gen X and 45% of Boomers and above. Similarly, 60% of respondents with HHI below $50k reported their financial situation had worsened compared to 49% of those with HHI between $50 and $99k and 42% of those with HHI above $100k. 

Despite recent reports of Americans stockpiling trillions of dollars throughout the pandemic, many have actually seen their savings dwindle. According to Credit Karma’s latest study, 38% of Americans reported the amount of money they have in savings has decreased since the start of the pandemic with an additional 12% saying they do not have any money saved. Unsurprisingly, those with household incomes below $50k were the most at risk with 40% of those reporting their savings had decreased since the start of the pandemic and another 20% saying they lack savings altogether. 

Americans dip into savings to cover necessities 

Pandemic-era government aid began to dry up in 2021, with fewer stimulus payments issued to Americans and expanded unemployment benefits coming to an end. As a result, many Americans had to tap into savings to cover their expenses. According to the study, 62% of Americans say they had to dip into their savings at some point in 2021. Of those, 60% used their savings to pay for bills, such as credit cards and student loans, and another 59% used the money to pay for necessities, including rent, food and other living expenses. 

Here’s a breakdown of expenses covered by savings by income bracket: 

HHI Less than $50kHHI $50k-$99kHHI More than $100k
Pay for necessities (e.g. rent/food/living expenses, etc.)67%52%46%
Pay for bills (e.g. credit card, student loans, etc.)63%58%53%
Pay for a big purchase (e.g. car, house, etc.)9%17%25%
Pay for travel7%10%26%
Pay for a special event (e.g. wedding, birthday celebration, etc.)7%10%24%
Pay for holiday shopping26%35%38%
Pay for electronics (e.g. TV, laptop, cell phone, etc.)17%17%24%
Pay for exercise equipment3%5%15%
Pay for apparel (e.g. clothing, shoes, etc.)22%19%27%
Pay for moving expenses (e.g. deposit, movers, etc.)12%11%21%
*Among those who had to dip into their savings in 2021 

How did we get here? 

At the start of 2021, vaccines were being rolled out to a broader population of people, the number of COVID cases began to stabilize and a return to normal was starting to feel more imminent. As a result, many consumers resumed pre-pandemic spending on things such as dining out, travel and shopping. This, combined with rising inflation, increased consumers’ overall spend throughout the year.

According to the study, 59% of respondents said they spent more money in 2021 than they did the year prior with nearly half of those reporting feelings of regret about their spending in 2021. Generationally, Gen Z and millennials were the most likely to report spending more last year – 64% and 66%, respectively – with Gen Z feeling the most regretful (64%). 

New year, new spending habits? 

Of those who spent more money in 2021, 44% say they plan to spend less in 2022 with Gen Z being the most likely to report plans to pull back on spending in 2022 (53%), compared to 41% of millennials, 42% of Gen X and 45% of Boomers and above. Yet, more than one-in-four report plans to spend more this year. This is concerning when you dig into the areas in which people plan to overextend themselves. 

According to the study, 40% of respondents say they plan to overspend on necessities, including rent, food and living expenses in 2022. Other areas in which consumers expect to splurge include personal travel/vacation (25%), dining out (24%) and travel to visit family (22%). 

Here’s a full breakdown of where consumers expect to splurge or overspend in 2022:

Necessities (rent/food/living expenses)40%
Personal travel / vacation25%
Dining out24%
Travel to visit family22%
Medical costs21%
Shopping for clothing / revamping wardrobe19%
Moving expenses / new housing14%
Social engagements (party, birthday, etc.)11%
Health and fitness (gym membership, exercise equipment, etc)11%
School materials for my kids9%
Higher education9%
Music festival(s)5%
Bachelor/bachelorette party2%

Will 2022 be the year to get back on track? 

Half of all respondents say their top financial goal for 2022 is to increase their savings, followed by spending within their means (37%) and paying off other debts (35%). 

“We’re getting some mixed signals when it comes to the state of consumers’ finances as we enter the third year of the Covid-19 pandemic,“ said Colleen McCreary, consumer financial advocate at Credit Karma. “However, if this study is any indication, many consumers’ finances have taken a hit over the last two years and, in particular, their savings. This is a problem, when you consider nearly half of all Americans don’t have $400 saved to cover an unexpected emergency. As we enter a new year, amid an uncertain economic backdrop, rising inflation and perhaps the largest exodus from the jobs market in recent history, it’s important for consumers to consider their finances before they take action. That’s especially true for those looking to leave their jobs or make a major purchase, like buying a car or home. At the end of the day, cash is king.” 


On behalf of Credit Karma, Qualtrics conducted a nationally representative online survey in December 2021 of 1,043 Americans, aged 18 and above, to understand the pandemic’s lasting effects on consumers’ finances, how their spending habits have and will change in the new year, along with top financial goals for 2022.