Changes in saving, spending, and giving are impacting your congregation, but do churchgoers notice the financial tradeoffs they are making?
By Scott McConnell
Across America, people are making financial changes. Whether intentionally or unintentionally, those in your congregation are as well. Let’s look at changes in saving, spending, and giving and consider challenging our congregations to check on the financial tradeoffs they are making.
The U.S. Bureau of Economic Analysis tracks the personal savings rate of Americans. As of June 2023, the rate was 4.3% of personal disposable income. This is the percentage saved from personal income after taxes. This savings rate only dropped below 5% once between 1960 and April 1999. In the 1960s, 1970s, and early 1980s, the rate was often 10% or higher.As of June 2023, the personal savings rate of Americans was 4.3% of personal disposable income. That percentage only dropped below 5% once between 1960 and April 1999. Click To Tweet
This long-term change reflects some other economic factors, but compared to the ’60s and ’70s, Americans are clearly saving less. So, those dollars are either being spent or given away.
According to the Bureau of Labor Statistics (BLS), in 2021, average annual expenditures were up 9.1% from 2020. Part of this growth was due to higher prices as measured by the Consumer Price Index (CPI-U) increase of 4.7%. And another portion of the increase was due to the 3.7% growth in the average household’s income before taxes.
Parts of 2020 made it difficult to spend money since some businesses were closed. So, it is worth noting that 2021 expenditures were also 6.1% higher than 2019.
Overall, housing accounts for the highest share of Americans’ spending (33.8%), followed by transportation (16.4%), food (12.4%), and personal insurance and pensions (11.8%).
Each accounting for less than a tenth of the typical consumer’s spending are expenses including healthcare or personal care products and services (9.3%), entertainment and reading (5.5%), apparel (2.6%), education (1.8%), miscellaneous (1.5%), and alcohol and tobacco (1.3%).
On average, Americans spent 3.6% on cash contributions to others. This is down from 3.7% in 2020 but higher than it was in 2019 before the pandemic (3.2%). Cash contributions include charitable gifts to religious, educational, charitable, and political organizations. However, it also includes payments made to others for alimony, child support, and the care of students away from home.
As these broad contributions to others declined in 2021, spending on entertainment, food, apparel, and transportation increased. It is revealing that entertainment, one of the few clearly discretionary categories, is consistently much bigger than payments made to others.Entertainment, one of the few clearly discretionary spending categories, is consistently much bigger than payments made to others, which includes charitable giving. Click To Tweet
Thankfully another survey more narrowly measures donations in the U.S. without other required payments mixed in. According to Giving USA, Americans gave 1.7% of their personal disposable income to charity in 2022. This means Americans are giving the lowest percentage to charity since 1995.
The total amount of charitable giving fell by 10.5% compared to 2021, with adjustments for inflation. Not all charities have experienced the same declines. Adjusted for inflation, giving to organizations focused on education decreased 10.7%. Giving to organizations focused on the environment and animals decreased 8.9%, and giving to human services decreased 8%. Religious organizations saw a smaller decline at 2.6%.
5 thoughts for congregations
A wide variety of financial factors are at work both in the economy and in individual finances. Here are five specific spending dynamics impacting people in your congregation today.
1. Giving is always a tradeoff
Even if someone sets up auto payment donations and forgets it, they still decide to give that amount on a regular basis. Only half (51%) of Protestant churchgoers say they give 10% or more of their income to the church they attend. For those who do, that money is no longer available to save or spend. We cannot give to God without denying other wants or needs. As an individual or family considers financial tradeoffs, what value are they placing on giving to God?
2. Past financial decisions affect today’s decisions
When a family finances a house, a car, student loans, personal loans, payday loans, or carry over a credit card balance, their decisions are financial commitments that impact future decisions. They must make a payment this month on these financial decisions made in the past. That leaves less income for everything else. In the last two years, adjustable interest rates associated with any form of financing have risen significantly. Are the people in your congregation pausing to consider the long-term implications of obtaining various personal loans?
3. Inflation and higher interest rates change things (even when people don’t think about it)
Someone may be disciplined and buy the same groceries every week, buy the same bus pass to get to work, and subscribe to the same streaming service. But if the prices of these things rise, they have less money for everything else. Their consistency didn’t prevent their spending from changing. If they don’t reevaluate their spending as prices change, they may find themselves spending too much on lower priorities and end up without enough for things they care more about. Inflation means their money can go to fewer things. Have those in your church stopped to consider which ones matter most?
4. Getting a raise necessitates a financial reevaluation
We all welcome a raise. Many workers and Social Security recipients are receiving more income each month because of raises this past year. But if a person’s raise is smaller than the price increases, they are not ahead. The BLS data above shows that in 2021, on average, income grew 1% less than prices rose. If someone doesn’t change anything about their spending after a raise, then they give their church a smaller percentage of their income. Do your congregants automatically reevaluate their spending every time they get a raise?
5. How we decide what happens to our money matters
When a dollar comes our way, our financial decision of what to do with that dollar isn’t automatically good or bad based on whether we keep, spend, or give it away. But our decision will be tied to a motive, and God cares about our motives.“If the churchgoers in your pews want to honor God with their money, they must be intentional about their financial priorities.” — @smcconn Click To Tweet
Saving is often a positive, but it can also be a vice for someone overvaluing security, hoarding, or avoiding losses at all costs. Spending also may indicate the presence of a vice if a person seeks to buy things that promise to deliver something they value more than God including fun, prestige, experiences, or friends. But is choosing to give ever unhealthy? Yes, if someone is trying to win God’s favor or is seeking recognition for their gifts.
If the churchgoers in your pews want to honor God with their money, they must be intentional about their financial priorities.
For permission to republish this article, please email Marissa Postell Sullivan.
Scott is the executive director of Lifeway Research.