On the heels of news that consumer credit recently surged to its highest point in 10 years time comes another development that points to a still-struggling economy: a dramatic dip in consumer savings. From personal savings accounts, to 401(k) retirement savings plans, to college savings accounts, Americans are stashing less and spending more.

In November, personal savings fell to 3.5 percent, a big dip from the 5.1 percent savings reported earlier in 2011. Americans’ 401(k) retirement plans are also taking a hit, as one-third of those who have these plans also have outstanding loans on them. Tack on to that the 10 percent dip in college savings reported in the third-quarter of 2011 and it’s pretty clear Americans are strapped for cash.

What are these diverted savings account funds going toward? The basics, of course: day-to-day living expenses, from bills to car repairs. The same could also be said of the surge in consumer credit. While the price of food and energy are going up, the incomes of Americans are not keeping pace. For many, charging more and saving less are their only means of keeping afloat.

If you are strapped for cash, think long and hard before diverting funds from your savings (or charging up your credit cards). That should only be a last resort after you’ve exhausted all your other options:

• Go over your budget with a fine-tooth-comb
• Eliminate expenses that aren’t absolute necessities
• Cut your energy costs
• Cut down on your gas costs
• Make lists and sticking to them
• Shop with coupons

Granted, all of this is easier said than done, but there is no doubt that making the effort will save you something – probably a lot more than you think. Get helpful hints and tips in our comprehensive collection of budgeting and saving articles.

What about you? Are you saving less and, if so, to what are you diverting those funds?

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