The Weekly Wrap: Savings Falling, Tuition Insurance Rising, and Retail Revamping

Money, Money Everywhere – Not a Cent To Save

After over a year of lockdown, the hounds of spending and recovery have been let loose.

Financial markets are booming and consumers are shopping again. As a result, we are spending more, but many lack the savings they need.

Join Robinhood – Learn to invest. Win $20,000 towards tuition

FOMO Leads the Trend

A new survey by Massachusetts Mutual Life Insurance reports we are spending an average of $765 more per month this summer than we did last summer.

The survey cites the Fear of Missing Out (FOMO) for the increased spending. Over half of those polled say FOMO influenced their buying. Of those, young people are most affected.

“FOMO is particularly rearing its head for younger generations,” according to MassMutual. “Of those financially impacted by the rise in gatherings, Millennials, and Gen Z report spending, on average, $1,016 more per month than they did last summer.”

What About Savings

At the same time, a Stanford University study released this month highlights a financial challenge for many families. 

About one-third of Americans could not cope with a “mid-size financial shock” even before the pandemic, according to the survey.

The report, titled Financial Resilience in America, examined American’s ability to handle a $2,000 “financial shock”, total debt, and emergency savings. It also reported about 33 percent of households were living paycheck-to-paycheck in early 2020.

No Improvement

A more recent report indicates savings have not improved for most families.

Bankrate’s July 2021 Emergency Savings Survey found that 51 percent of Americans don’t have enough money to cover three months of living expenses. Of those, 25 percent have no emergency funds. That is up from 21 percent last year.

More Have Less

More people (34 percent) said they have less in emergency saving this year than last year. Only 17 percent said they have more.

New Employee Benefit

Employers can help. Company-sponsored savings plans began prior to the pandemic. The trend is picking up and many businesses offer employees incentives, such as cash, to fund a company-sponsored emergency fund. 

One example is KFC, which recently began offering employees a savings match of $240 over six months.

“Employers are aware that if you can’t cover your day-to-day expenses, you’re not going to save for long-term goals, such as retirement,” said Leigh Phillips, CEO of nonprofit SaverLife.

Delta Drives Tuition Insurance Purchases

Okay, it’s back to school. Time for college students to make sure they have everything for the new school year. For more and more, that includes tuition insurance.

Most colleges and universities offer a refund on a sliding scale if a student withdrawals early. Tuition insurance may reimburse policyholders for college expenses including tuition, room and board, and related fees.

The annual cost of college in the United States is $35,720, according to Educationdata.org. That includes tuition, books, fees, and room and board. Those expenses have tripled over the last 20 years.

More Withdrawals 

About 40 percent of college students were financially impacted by Covid-19 last year. That includes 8.2 percent who withdrew from school, according to the National Center for Education Statistics.

Medical-based withdrawals were on the rise even before the pandemic. 

A Higher Ed Dive survey reveals that 70 percent of the 179 schools surveyed report an increase in medical withdrawals in 2019. That is up from 42 percent in 2015.

More In-person Classes 

About 78 percent of colleges and universities are resuming in-person classes, reports the National Association for College Admissions Counseling.

Vaccine Requirement

Over 700 schools require vaccination for most students and staff, according to Best Colleges. That list is growing and Best Colleges is updating it daily.

A couple of lawsuits have been filed in opposition to the vaccine requirements. Those suits argue that vaccines can not be mandated while they are under Emergency Use Authorization (EUA). However, Monday’s approval of the Pfizer vaccine by the Federal Drug Administration (FDA) makes that argument mute.

Read and Understand Before Buying

Tuition insurance policies are written by attorneys based on actuarial research. That means you need to read the fine print and understand exactly what the policy covers before you buy. 

To learn more, you can check with your school’s admissions office. You can also visit the websites of providers. The two largest tuition insurance firms are GradGuard and A.W.D. Dewar.

Latest Trend in Retail – More Brick and Mortar

An old English saying states that “necessity is the mother of invention”.

Retail stores are proving that adage true through order fulfillment and forming alliances with other companies

The Death of Retail Is Greatly Exaggerated 

The pandemic decreased foot traffic in malls and brick and mortar stores over the last year-plus. It also accelerated online shopping. Some predicted the end of in-store shopping. 

However, retailers quickly adapted.

Fulfillment

One of the most dramatic changes in brick and mortar stores is their rapid transformation to mini fulfillment centers.

“But they did an incredible job of rapidly retooling their companies to be able to pick and put together orders inside and be able to ship them,” says David Marcotte, senior vice president at Kantar. 

Almost two-thirds of retailers offer or plan to offer purchases online with pick up in-store, according to the National Retail Federation (NRF). In addition, over half of retailers offer or plan to offer ship from store programs.

A more concrete change is also trending in retail. 

Store-in-Store

More companies are partnering with other businesses to create a store within a store.

Target currently has Disney outlets within 53 stores. It recently announced plans to add 160 more by the end of the year. The move comes as Disney announced the closing of 60 stand-alone stores.

In addition, Macy’s said last week that it is putting Toys ‘R’ Us in 400 of its stores.  

“Toys “R” Us is a globally recognized leader in children’s toys,” says Nata Dvir, Macy’s chief merchandising officer, “and our partnership allows Macy’s to significantly expand our footprint in that category, while creating more occasions for customers to shop with us across their lifestyles.”

Toys ‘R’ Us closed all its retail locations in 2018. It was purchased by branding company WHP Global earlier this year.

Halo Effect

The NRF says brick-and-mortar stores enhance online sales. 

“Ecommerce and in-store retail complement each other and often create a ‘halo effect’”, according to the NRF. It cites a study showing that opening a brick and mortar store increased traffic to that store’s website by 37 percent.

Amazon Rumor

Even e-commerce behemoth Amazon is reportedly expanding its physical presence in retail. 

The Wall Street Journal broke a story last week that Amazon “plans to open several large physical retail locations in the United States that will operate akin to department stores.”

The first stores will open in California and Ohio, according to the Journal, and will focus on expanding sales of clothing and household products. (Could Jeff Bezos’ recent trip into space have just been to scout store locations?)

Amazon has not commented on the report. However, if it is true, it may prompt some to recall another old saying, “the more things change, the more they stay the same.”

Read More:

• These 5 Stores Have The Best Price Match Guarantees
• You Can Save More Money By Not Having Health Insurance
• How to Save On Some of Life’s Most Expensive Items

If you enjoy reading our blog posts and would like to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started. 

Check out these helpful tools to help you save more. For investing advice, visit The Motley Fool.

Max Erkiletian

Max K. Erkiletian began writing for newspapers while still in high school. He went on to become an award-winning journalist and co-founder of the print magazine Free Bird. He has written for a wide range of regional and national publications as well as many on-line publications. That has afforded him the opportunity to interview a variety of prominent figures from former Chairman of the Federal Reserve Bank Paul Volker to Blues musicians Muddy Waters and B. B. King. Max lives in Springfield, MO with his wife Karen and their cat – Pudge. He spends as much time as possible with his kids, grandchildren, and great-grandchildren.