• Many Americans save far more than they need.
• Experts told BI this is largely due to concerns about rising costs of living, especially during retirement.
• Most high-income Americans are saving cash and trying to cut costs wherever possible.

One self-professed frugal told Business Insider that being frugal is a full-time job. The 32-year-old woman from Michigan has embraced the science of cost-cutting and reduced her necessary expenses to just $2,000 a month, about a third of her take-home pay.

Even though she makes six figures, she spends much of her free time on thrifty pursuits, such as thrift shopping and spending 30 hours a week making nearly all her food from scratch, including bread, pasta and canned goods.

He said that at this point it had become more of a lifestyle and requested to remain anonymous because his job is public. Despite the additional inconveniences, he said he doesn’t plan on giving up his frugal habits anytime soon.

“I definitely felt drained at times,” he said. “I think it would be a lot more stressful if my fiancé or I lost our jobs.”

Concern about being financially insecure despite being relatively well off is becoming more common.

Even though Americans are famous little savings and excessive spending, a small but growing super saver cohort— a group that spends much more than the recommended 15-20% of their gross annual income despite their generally solid financial situation.

Financial experts told BI this was largely due to a sharper awareness of the higher cost of living, with Americans still spooked by the sharp rise in prices a few years ago when inflation was around 9%.

There are signs that the number of oversavers in America is increasing. Bank of America’s 2024 research rich americans It was revealed that 55 percent of people aged 21-43 increased their cash holdings in the last two years, despite having at least $3 million in investable assets. On average, around 18% of the group’s portfolios were allocated to cash; this rate was much higher than 2%-10%. recommended by financial professionals.

Membership in the subreddit r/FIREA forum for high-earning, high-saving individuals who want to have enough wealth to retire early has seen a 265% increase in the past three years, according to analytics site Subreddit Stats.

Subreddit r/HENRYFinance— also filled by: high income earners Exchanging wealth-building tips – there was an even bigger boom, with membership rising over 9,000% during this time period.

The rich are increasingly trying to cut costs. discount chain Dollar Tree saw 3.4 million new customers from households Earnings over $125,000 Last year, the firm said this in its first quarter earnings release.

High-income Americans are more likely than other consumers to use coupons and shop secondhand. According to one study, 89% of households earning between $175,000 and $199,999 say: use coupon codes9 in 10 Americans earn over $175,000, more than any other income group purchased resale productAnother survey found a result 14 percentage points above average.

Kitty Ritchie, a financial advisor at Drucker Wealth Management, says she’s seeing more clients afraid to spend their savings even as they age into retirement with plenty of cash set aside for emergencies.

“I think there are more people worried about spending money. People who are saving money, they don’t want to lose it,” he said.

Cost of living stress

The pace of inflation has slowed significantly, but many Americans (even the wealthy) are still concerned that many costs are higher overall.

“Although people with six-figure incomes have a sizeable amount of money on paper, cost-of-living pressures reduce that pretty quickly,” said Ted Rossman, senior industry analyst at Bankrate.

Higher-income Americans may also feel less job security. white collar sectorhe stated. There are companies Announced that 664,839 people were laid off Challenger is the highest Christmas total recorded in the first 10 months of the year since 2020, according to Gray & Christmas.

These uncertainties are increasing Fear of not being able to retire on timethe 32-year-old rescuer from Michigan told BI. He pointed to his father, who depleted his retirement savings early after having to pay for cancer treatment out of pocket.

“I guess no matter how stable it seems, it feels like there’s a real risk that you might have to work for the rest of your life, and I definitely don’t want to do that,” he said.

Financial anxiety is higher than it was a few years ago. Accordingly A survey from Discover80% of Americans said they feel somewhat anxious about their finances; this rate was 71% in 2021.

But experts say excessive saving could harm Americans trying to build wealth in the long run. They may be excessive savers losing large investment gains By accumulating cash over the years.

They also risk reducing their quality of life, Ritchie said, especially if saving means postponing necessary health or household expenses.

“The saver is the 78-year-old man who works hard and does a good job, but he’s not going to spend the money now. And that’s the talk of ‘you can’t take him with you,'” he said.