Americans are now saving a paltry 3.4% of their disposable income — down from a pandemic peak of 34%. Here are 3 easy ways to buck that troublesome trend

In April 2020, the personal savings rate spiked to 33.8% — the highest it has ever been since Jan. 1959, according to the Federal Reserve Bank of St. Louis. But as COVID restrictions started to lift and scorching-hot inflation set in, that trend started to reverse.

As of September 2023, Americans are now saving just 3.4% of their disposable income, says the St. Louis Fed.

But with inflation remaining high, many Americans will find they need to lean hard on their savings. Here’s how to help build up a healthy savings cushion.

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Cutting expenses

When we talk about savings, we’re referring to whatever disposable income you have left over after subtracting your expenses. If you’re finding there’s not enough left after you pay your mortgage, utility bill, car payments and whatever else, you have two options: you can either increase your income or lower your expenses.

Break down your expenses into what’s essential and what’s a nice-to-have. You need to keep the lights on but do you really need to buy a new TV?

Maybe not, according to Amazon founder and executive chairman Jeff Bezos.

“If you're an individual considering purchasing a big-screen TV, you might want to wait, hold onto your money, and see what transpires,” Bezos told CNN. “The same is true with a new automobile, refrigerator, or whatever else.”

Once you’ve removed all the unnecessary items, you might be able to lower expenses on costs that you can’t avoid, like auto insurance.

The best way to save on insurance is to shop around. Each insurance company has its own underwriting process, which means depending on how they weigh certain factors, you could save hundreds of dollars a year by shopping around.

And the same principle applies for home insurance.

Boosting your income

Switching jobs can seem daunting.

But data from Pew Research suggests that 60% of people who switched jobs or employers between 2021 and 2022 saw their income increase. Meanwhile, fewer than half of people who stayed at their jobs saw any wage growth.

So if you’re looking to build up some savings, leaving your current role or employer for a better opportunity may be your best bet at getting the salary increase you’re hoping for.

If you don’t want to switch jobs, you could consider picking up a side hustle — by turning a talent or skill into a profitable part-time job. It allows you to earn extra income — and could even be a way of testing the entrepreneurial waters.

If that sounds overwhelming, keep it simple. Picking up the occasional tutoring session could be worth $75 to $90 an hour. And if you’re an outdoorsy or active person already, consider that dog walking could net you as much as $1,000 a month.

Read more: Millions of Americans are in massive debt in the face of rising rates. Here's how to take a break from debt this month

Putting spare change to work

Finally, keep in mind that when it comes to savings, the sooner you start, the better. You may believe you need a minimum amount to kickstart building your financial safety net.

But you shouldn’t overlook the power those nickels and dimes in your pocket can have. A survey from MyBankTracker found that 55.5% of Americans don’t do anything with their spare change. They just let it sit. But those coins quickly add up and you can put them to work.