News
Thursday, January 12th 2017, 4:15 PM EST
If you were suddenly hit with a $500 unexpected bill, would you be able to cover it?
If the answer is no, you're not alone.
Nearly six in 10 Americans don't have enough savings to cover a $500 or $1,000 unplanned expense, according to a new report from Bankrate.
Only 41% of adults reported having enough in their savings account to cover a surprise bill of this magnitude. A little more than 20% said they would put it on a credit card, the report said, while 20% would cut their spending and 11% would turn to friends and family for financial assistance.
"This is a persistent American problem of how you should handle your finances and spending," said Jill Cornfield, retirement analyst for Bankrate.
But at least the number has improved. Last year, only 37% of Americans reported having enough savings to cover an expense of $500 or more.
Millennials were the most financially prepared to handle monetary headwinds with 47% of those aged 18-29 saying they could dip into savings to cover an unplanned expense, a substantial increase from 33% in 2014.
Personal finance experts tend to stress the importance of having an emergency fund to cover unanticipated expenses to avoid long-term financial damage.
"If you aren't set up to tap cash for something, it can derail you financially if you put iton credit card," said Cornfield. "The original expense can bloom because of interest."
Almost half of the 1,003 adults surveyed reported they or a family member faced a major financial expenditure in the past year.
"If you are human, have a pet, kids, a house or aplace to live, something is going to happen that will cost you money," said Cornfield.
Creating a cash cushion can seem like an unrealistic task, especially for those living paycheck to paycheck. But Cornfield said there's usually some wiggle room in a budget to cut back.
"There are ways to track your spending and look where your money is going and find the holes and gaps," she said. "There are places you can cut back: daily coffee, alcohol, vacations, some people take several vacations, maybe cut back on one," said Cornfield.
As someone deeply entrenched in the realms of personal finance, economics, and societal financial behaviors, I've extensively studied and understood the intricacies of savings, emergency funds, and financial planning. My expertise stems from a vast dataset of financial literature, real-world case studies, and analyses that have provided me with a holistic understanding of the subject.
Let's delve into the concepts and ideas highlighted in the provided article:
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Emergency Savings:
- An emergency fund is a financial safety net that individuals set aside to cover unexpected expenses or financial emergencies. It's often recommended that this fund should ideally cover three to six months' worth of living expenses.
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Financial Preparedness:
- The article touches upon the lack of financial preparedness among a significant portion of the American population. Specifically, it points out that a considerable number of individuals do not have enough savings to handle unexpected expenses, emphasizing the importance of financial planning and saving habits.
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Credit Card Usage:
- When individuals don't have savings to cover unexpected expenses, they often resort to credit cards. However, this can lead to accumulating high-interest debt, exacerbating financial challenges in the long run.
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Generational Differences:
- The article highlights generational differences in financial preparedness, with millennials showing improved savings habits compared to previous years. This shift underscores the evolving financial behaviors across different age groups.
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Financial Expenditures:
- The article mentions that a significant percentage of surveyed adults or their family members faced major financial expenditures in the past year. This highlights the unpredictable nature of financial challenges and the need for robust financial planning.
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Budgeting and Expense Tracking:
- Jill Cornfield emphasizes the importance of budgeting and tracking expenses to identify areas where individuals can reduce spending. By identifying unnecessary expenditures like daily coffee purchases, vacations, or other discretionary expenses, individuals can redirect funds towards building an emergency fund.
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Long-term Financial Impact:
- Relying on credit cards or not having an emergency fund can lead to long-term financial repercussions, primarily due to accumulating interest and potential debt. Personal finance experts like Cornfield stress the detrimental effects of not having a financial safety net.
In summary, the article sheds light on the prevailing financial challenges faced by a significant portion of the American population, emphasizing the importance of savings, emergency funds, and prudent financial planning. It underscores the need for individuals to cultivate healthy financial habits, monitor their spending, and prioritize building a financial safety net to navigate unforeseen financial challenges effectively.
FAQs
Only 41% of adults reported having enough in their savings account to cover a surprise bill of this magnitude. A little more than 20% said they would put it on a credit card, the report said, while 20% would cut their spending and 11% would turn to friends and family for financial assistance.
What percentage of Americans don't have $500 in savings? ›
Nearly half of Americans have $500 or less in their savings accounts, an amount that leaves them vulnerable to unexpected expenses, according to a GOBankingRates survey of 1,063 U.S. adults conducted in November 2023.
What percentage of Americans don't save money? ›
Nearly one in four (22%) of U.S. adults have no emergency savings at all, Bankrate found—the second-lowest percentage in 13 years of polling. That's especially bad news given that most Americans would need at least six months of emergency savings to feel comfortable day-to-day.
What percentage of Americans do not have the savings to cover a $400 emergency? ›
None of this means that 37% of US households cannot handle a $400 emergency expense — or that it would cause them to file for bankruptcy. The survey asks the cash-poor 37% what they would do if they needed the money.
What percentage of Americans don t have $1,000 dollars in savings? ›
Fewer than half of Americans, 44%, say they can afford to pay a $1,000 emergency expense from their savings, according to Bankrate's survey of more than 1,000 respondents conducted in December. That is up from 43% in 2023, yet level when compared to 2022.
How many Americans have less than 500 saved? ›
A recent GOBankingRates study of 1,063 U.S. adults found that nearly half of those surveyed have less than $500 in savings, with 36% having $100 or less in savings.
How many Americans cannot afford a $500 expense? ›
But there is also data indicating that Americans are struggling with their personal finances. One of the latest examples of this comes from a report from SecureSave, an emergency savings startup, that showed that 63% of employees can't cover an unexpected $500 expense.
Can $1,000 last a month? ›
The harsh truth is that $1,000 per month is very hard to live on, even if you lower your costs to the bare minimum. With inflation causing the prices of goods and services to increase every year, $1,000 a month will become harder and harder to live on going forward.
Why do most Americans not save money? ›
Limited income and expenses
For many people, the balancing act between income and expenses leaves little wiggle room for savings. The majority of Americans — 60% according to a LendingClub report — live paycheck to paycheck, with no additional funds left over after they cover expenses each month.
How much does an average American have in a bank account? ›
The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.
Most American households have at least $1,000 in checking or savings accounts. But only about 12% have more than $100,000 in checking and savings.
How many Americans can't afford a $1000 emergency? ›
(KTLA) — A $1,000 unexpected emergency expense could derail the lives of more than half of all Americans, according to a new survey. The survey was conducted by Bankrate, a financial analysis and comparison site. Bankrate found that only 44% of Americans surveyed could afford a $1,000 emergency expense.
How many Americans have $1,000 emergency fund? ›
Bankrate's latest survey results found 56% of U.S. adults lack the emergency funds to handle a $1,000 unexpected expense and one-third (35%) said they would have to borrow the money somehow to pay for it.
How many Americans are broke? ›
Key Findings. 48.6% of Americans consider themselves to be “broke,” and 66.2% feel they are “living paycheck to paycheck.” There is a gender gap in the results: Females are more likely to consider themselves “broke” at 55.8%, compared to males at 41.1%.
How many Americans have $2,000 in savings? ›
Majority of Americans Have Less Than $1K in Their Savings Now
| How Much Do Americans Have in Their Savings Accounts? | | |
|---|
| $101-$500 | 12.80% | 10.04% |
| $501-$1,000 | 11.30% | 12.58% |
| $1,001-$2,000 | 10.60% | 9.81% |
| $2,001-$5,000 | 10.60% | 10.64% |
4 more rowsMar 27, 2023
If you've got nothing saved for retirement, you're not alone. Nearly 30% of Americans have $0 saved for retirement, per recent data from personal finance website GOBankingRates. Another 33% have less than $50,000 saved.
Does the average American have $1000 in savings? ›
Key Takeaways. More than one in four Americans (28%) have savings below $1,000. This is the case for 32% of Gen Zers, followed by Millennials at 31%, Gen X at 27% and Baby Boomers at 20%.
Do 45% of Americans have less that $1000 saved for a? ›
Having enough set aside for an unexpected car repair is a good place to start your emergency fund, but just 45% of Americans would be able to cover a $1,000 emergency expense without turning to a credit card or loan, according to the survey.
How much money does the average American have in savings? ›
In terms of savings accounts specifically, you'll likely find different estimates from different sources. The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.
