Study reveals which state residents have the largest savings and checking accounts
March 15, 2011
We've all heard a lot of talk recently about the importance of saving and having some surplus cash in your savings account, money market account or checking account. The recession caught a lot of people unaware and many of them lost their homes or their businesses because they didn't have enough money saved up in a "rainy day fund" to help them weather the financial storm.
How much do consumers actually save?
A recent analysis by Pitney Bowes Business Insight, a software and services company, found that the average balance in American savings accounts is $5,753. The highest average balances are in New Jersey, where residents have $7,477 on average socked away in consumer bank savings accounts. Connecticut, with $6,914 in average savings, and Massachusetts, with $6,847, took second and third place.
All told, residents in 17 states are saving more than the national average.
The three states with the lowest average savings account balances were Nevada with $4,794, New Mexico with $4,515 and Arizona with just $4,466 in consumer bank savings accounts.
New York, Connecticut and Massachusetts also lead the nation in the average balance in a non-interest checking account, with average balances 30 to 45 percent higher than the national average of $2,947. The smallest average checking account, with $2,174, is in West Virginia, but Kentucky and Arkansas are not far behind, with $2,265 and $2,259 respectively.
Saving vs spending: Which is better for the economy?
According to the Christian Science Monitor, 6 out of 10 Americans say they prefer saving over spending, and saving rates have increased from less than 2 percent in 2005 to around 5.4 percent in 2010.
But economists argue whether all this saving is good for the economy. Americans are often urged to spend during recessions in order to stimulate the economy, and one of the reasons the country has been slow to shrug off the most recent recession is because people are saving more and buying less. According to the Monitor, this phenomenon is called "the paradox of thrift"--individual frugality leads to collective economic malaise.
The other side of the argument is that saving and investing fuels economic growth by providing a stockpile of cash entrepreneurs can use to start new enterprises.
So who's doing the right thing--the folks in New Jersey who are saving or the residents of Arizona? Perhaps only time will tell. But according to Lauren Weber, author of "In Cheap We Trust," people borrowing and spending too much contributed greatly to the recession in the first place. She's right: Keep saving!