This Money Trend Is Going Viral…Is It Dangerous?

You’ve probably heard of revenge spending, a money trend that took off in the years following the pandemic. But now there’s a new money trend taking Gen Z and millennials by storm—and we kind of love it. In fact, I am so excited to talk about it. We’re going to go over what it is, what we like about it, and where we think there’s room for improvement right now. So, let’s dive in.

In case you haven’t heard of revenge spending, it’s a phenomenon where consumers rush to spend more than they normally would—often when they feel they were deprived of something during an adverse economic event. And typically, those reactionary expenditures are a lot more focused on short-term satisfaction.

The period after the pandemic was a more or less universal instance of this trend occurring. Folks had massive travel plans, events, and purchases that were delayed or even flat-out canceled. After the initial wave of shutdowns, consumer behavior responded. For example, in April and May of 2020, sales of Tiffany & Co. products surged 30% and 90% respectively when you compare them to the same months in the previous year. Burberry, another luxury brand, experienced a similar upshot in sales of designer clothes and bags.

But now—enter revenge saving, which is a pivot to the acceleration of personal savings rates in response to economic uncertainty, layoffs, and inflation. And this trend has taken the country by storm.

What are you talking about? This more revenge. There’s more revenge.

You know, many Americans are changing their financial habits right now from revenge spending—that trend of splurging after the pandemic—to now moving in the opposite direction: revenge saving.

71% of Americans revised their savings behavior in 2025, with 45% of Americans actually boosting their savings. What we think is especially cool is how many different ways people are choosing to hop on this trend.

To save on toilet tissue—I use, uh, 10 pieces, 10 squares every day. That’s a daily routine.
My God, that’s disgusting.

Many people are implementing dedicated low-spend months, where they drastically reduce discretionary spending, cut back on subscriptions they don’t use, or maybe cook more meals at home instead of dining out.

Financial institutions are seeing increased interest in high-yield savings accounts that are offering somewhere around 4% annual yields with FDIC insurance, as savers are seeking to maximize returns on their emergency funds without going too far out on the risk spectrum. (Here’s what we recommend for emergency savings)

Although, there is a small caveat to that, which we’ll get into later.

Automation has also become a key strategy, with savers setting up incremental 1% increases to their savings rate every few months and directing portions of their paychecks straight to savings accounts through direct deposit splits.

Additionally, there’s growing popularity in creating sinking funds, which are dedicated savings pools for specific short-term goals like vacations, home repairs, or holiday spending. These allow people to plan for expenses without derailing their broader financial progress.

And all of that—we absolutely love.

And it’s not like this is a drop in the bucket, either. In the last few months, from December of 2024 to April of 2025, the U.S. saw a 40% increase in average savings rates, according to the Bureau of Economic Analysis. Which again—let me be clear—we love. But it doesn’t quite tell the whole story. More on that in a minute.

First, we need to understand why this is happening.

In a word: uncertainty.

People are feeling squeezed by a mix of sticky inflation, high interest rates, and waves of layoffs. And that’s making cash feel like a safe haven. Add to that more personal factors that impact all of our financial lives differently, and you can see why more and more Americans are prioritizing liquidity.

It’s not just about paying for emergencies. It’s about peace of mind.

For millennials and Gen Z, it’s also a reaction to overspending in the past and a desire to have more control over their financial lives. They see cash reserves as kind of an empowerment—the ability to change careers, move to a new city, or even start a business without being shackled by debt or tied down by lack of options.

And of course, the pandemic has cast a long shadow on many areas of our financial lives. The financial chaos of COVID left a mark, teaching people—especially younger generations—that things can become very uncertain, very quickly. Even if it rebounded quickly, that initial sting of the chaos has stuck.

It’s reshaping how younger generations especially think about saving and spending.

Revenge saving isn’t just about hoarding money. It’s about reclaiming control, creating options, and building a sense of security.

But again, there are some important caveats about this trend that we need to address.

Remember that 40% increase to savings rates? If we take a closer look at the absolute values, they did increase—from 3.5% to 4.9%.

And I doubled my sales last month.
Oh really? From what? 2 to 4.
Yep.

While that’s certainly a step in the right direction, it’s simply not enough for long-term financial security.

What’s more concerning is that a huge portion of these savings are going to cash, rather than retirement accounts or other investments. This focus on liquidity makes sense psychologically, but it may come at the cost of long-term growth.

Now, let me be clear—because there is an important distinction to make here.

Building an emergency fund of 3 to 6 months of expenses is essential financial planning. So it’s not inherently a bad thing on its own. But many Americans are stacking up additional cash beyond this threshold based on short-term market volatility.

While we understand this impulse—especially given the recent economic uncertainty—we never want folks to pause or delay investing because of temporary market conditions. Doing so often means missing out on significant market gains that typically occur even amidst the chaos.

Despite our enthusiasm for this savings trend, historical data would suggest it’s just a trend.

If these trends continue—hey—there is substantial evidence showing that Americans tend to increase savings rates during economically volatile periods, but return to lower baseline habits once the conditions stabilize.

Looking at Federal Reserve data, we saw savings rates skyrocket in the months following COVID. But those few months are outliers in the broader pattern. The average personal savings rate since the year 2000, even including those 20+% months during the pandemic, is just over 5.5%.

This historical context suggests that while the current revenge saving movement is positive, it’s unlikely this upward momentum will push the national savings rate far beyond that 5.5% threshold over the long term.

So, what can we take away from this revenge saving trend? And how can we collectively capitalize on it to improve our financial habits?

Whether you’re revenge saving, trying to hop on the trend, or simply trying to feel some financial security, here are some things to keep in mind as you save for the short term as well as the long term:

First, know where to keep your emergency cash. A recent MarketWatch study found that 34% of emergency funds were kept in brokerage accounts.

Now, that’s not necessarily a problem if it’s in a money market fund within the brokerage account, as those yields often match high-yield savings accounts and remain easily accessible. However, if it’s just sitting idle in a brokerage account, you should consider moving it to a high-yield account, a money market account, or maybe even a money market mutual fund, so that you can earn better interest.

And if your emergency fund is actually invested, that’s a definite no.

Okay.
Yep. That’s a definite no. That’s a no-no. Hard pass.

Emergency funds need to be readily available when you need them the most—which often coincides with market downturns. If the market drops 20% right when you need those funds, you won’t have the financial security you thought you did.

It’s also important to understand that while cash may feel like a safe option, having too much of it can actually put your financial future at risk. Cash is certainly a valuable tool in your arsenal, but it simply doesn’t have the earning power to build long-term sustainable wealth on its own.

I mean—even a high-yield savings account—inflation will gradually erode your money’s purchasing power over time.

The reality is: you’ve got to be investing. (Here’s our guide to how to start investing the right way)

While we absolutely love that people are building up their cash reserves, don’t get stuck in this phase of the wealth-building process because of short-term fears.

Capitalize on this savings momentum. Once your short-term cash reserves reach that appropriate threshold of either 3 to 6 months of expenses, start directing maybe just a small portion of your income—maybe 5% or 10% of your paycheck—towards investments.

Take a page out of the revenge savers’ playbook and automate that process. Setting up salary deferrals or making a few quick taps in your banking app can remove much of the friction from building wealth.

And as always, keep building towards your great big beautiful tomorrow.