Americans are still not splurging

As the economy improved dramatically in the second half of 2014, retailers across the country were hoping that Americans would finally open their wallets wide and spend like crazy during the holiday season. There was an increase in spending by only by a modest amount.

According to a new study from Bankrate, only one-in-six Americans spent more than they expected to this past holiday season. It suggest many consumers put themselves on a strict budget and kept to it. Households with higher incomes splurged a little more than those lower-income households but not by much.

Bankrate.com chief financial analyst Greg McBride said this trend reflects possible stagnant income and limited buying power. Another possible explanation, however, that people still have fresh memories of tough economic times. After all, the Great Recession had a lot more in common with the Great Depression than it did with other recessions of past decades. It produced years of high unemployment and frozen wages.

While the economy is back on track, the effects of the Great Recession are universal. Incomes really haven’t gone up much despite the economy adding jobs at a good rate and showing strong growth.

Perhaps it will take more than a good year to get Americans back into their pre-recession spending habits.

MyLife – Saving Money for Something Big Target Savings