Economía y Agricultura en Puerto Rico – Eduardo Bonilla

Why is the average savings in Puerto Rico so low? (English Version)

Saving is one of the most powerful tools for achieving economic stability; however, in Puerto Rico, it remains a difficult goal for most households. With a historically low household savings rate and a population facing high living costs and limited incomes, the country faces a structural challenge that threatens its collective financial well-being.

This article analyzes the causes behind the low average savings rate in Puerto Rico, the role of financial education in this issue, and the possible solutions to promote a sustainable and productive savings culture.

The current outlook on savings in Puerto Rico

According to the Financial Industry Regulatory Authority (FINRA), only 41% of adults in Puerto Rico report having emergency savings — a figure considerably lower than the U.S. average of 53%.
Furthermore, only about 35% of adults have an active retirement account, whether through their employer or independently.

According to the outlet Sin Comillas, the household savings rate in Puerto Rico turned negative again in 2022 (–0.7%), meaning that consumption exceeded income. In other words, many households spend more than they earn, financing their consumption through credit or by reducing their assets.

For its part, NotiCel reported that only 43% of Puerto Rican families maintain some type of savings, while the rest live month to month without an emergency fund or financial reserve.

These figures reflect a consistent pattern: the low level of savings is not a temporary phenomenon, but a direct consequence of deeply rooted structural and cultural factors.

Structural factors that limit savings

• Low income and job insecurity: The average annual household income in Puerto Rico is around US $22,000, according to the Consumer Financial Protection Bureau (CFPB). This is less than half the average household income in the United States. When most of the income goes toward basic expenses—housing, food, transportation, and healthcare—the margin for saving is almost completely eliminated.
• High cost of living: The cost of living on the island has increased significantly. The Puerto Rico Chamber of Commerce estimated in 2025 that the average monthly household expense reaches US $3,013, a figure that practically consumes all the income of an average household. Inflation in food, electricity, and housing has outpaced wage growth, leading to a sustained loss of purchasing power.
• Culture of consumption and indebtedness: Consumption—often encouraged by easy credit or credit cards—has become a structural feature of Puerto Rico’s economy. In several recent years, the savings rate has been negative precisely because families spend beyond their income. This pattern is worsened by personal loans, installment financing, and limited financial planning.
• Low savings returns: The interest rates offered by banks and cooperatives on traditional savings accounts are extremely low. For example, some local cooperatives offer only 0.10% APY on regular savings accounts.
  This discourages many citizens from keeping money in the financial system, promoting informal saving or immediate spending instead.
• Economic inequality and lack of asset support: Families with inherited resources or access to financial assets are more likely to save. In contrast, most households in Puerto Rico live under conditions where income barely covers basic needs, leaving no capacity to generate surpluses or accumulate wealth.

The role of financial education

• Lack of basic knowledge: The lack of financial education is one of the most determining factors. According to the Student Financial Education Manual published by the Pontifical Catholic University of Puerto Rico, a large portion of young people and adults are unfamiliar with essential concepts such as budgeting, compound interest, or asset diversification. This directly affects the lack of long-term planning, the tendency to go into debt without a strategy, and the inability to generate stable savings.

Cultural deficit and weak saving habits

Beyond knowledge, there is a cultural deficiency regarding the habit of saving. Financial goals are vague, and few citizens set aside separate funds for emergencies, retirement, or medium-term objectives. 

Lack of trust in financial institutions

In some sectors, especially rural or low-income ones, distrust toward banks and cooperatives persists, driven by bad experiences, hidden fees, or lack of transparency. This leads many people to keep their money in cash, preventing its growth or investment.

Proposed solutions

A. Public and fiscal policies:

• Tax incentives for saving — Offer tax credits or deductions to individuals who consistently save in retirement accounts or emergency funds.
• Matched savings programs — Where the government or institutions match a percentage of citizens’ savings, especially for housing or education.
• Automatic payroll savings — Implement voluntary payroll deduction systems that automatically transfer a percentage to savings accounts.
• Strengthening social security and medical coverage — Reducing unexpected expenses through public policies can free up more disposable income for savings.

B. Accessible financial education:

• Integrate personal finance into the school curriculum starting at the middle school level.
• Municipal and community programs that provide free guidance on budgeting and saving.
• Use of local financial applications that facilitate goals, reminders, and savings automation.

C. Banking and technological innovation:

• High-yield, low-cost accounts offered by local cooperatives.
• Micro-savings systems that round up purchases and automatically deposit the difference.
• Greater transparency regarding fees, penalties, and conditions of financial products.

D. Culture and social motivation:

• Public awareness campaigns featuring real testimonies from families who achieved financial independence.
• Monthly savings challenges on social media and in schools.
• Personalized financial coaching accessible through cooperatives and municipalities.

Conclusion

The low average savings rate in Puerto Rico is a direct consequence of low wages, a high cost of living, an imbalance between consumption and income, and a historical lack of financial education. However, it is not a problem without a solution. With focused public policies, education from childhood, and a social culture that values saving as a driver of economic independence, Puerto Rico can move toward a more stable and resilient model. Saving is not just an individual practice—it is a collective development strategy.

The Official Sponsor of this article is:

De Mi Tierra a Mi Pueblo Corp. 🌱  Committed to Agriculture and Food Security in Puerto Rico.

References

• FINRA Foundation (2024). Panorama de la Capacidad Financiera en Puerto Rico. 
• Sin Comillas (2023). La tasa de ahorro de las familias vuelve a ser negativa.
• NotiCel (2013). Solo el 43% de las familias puertorriqueñas tienen ahorros. 
• Consumer Financial Protection Bureau (2024). Las dificultades financieras son más duras en Puerto Rico que en el resto del país. 
• Cámara de Comercio de Puerto Rico (2025). Estudio sobre gasto mensual promedio de las familias puertorriqueñas.
• Pontificia Universidad Católica de Puerto Rico (2024). Manual de Educación Financiera Estudiantil.
• JetStream Federal Credit Union (2024). Tasas de ahorro. 

October 12, 2025