While nobody really wants to tap into their emergency savings, most Americans couldn’t even afford to do so if they had to.
A stunning new Bankrate survey of 1,030 individuals finds that more than half of American adults (56%) lack sufficient savings to shoulder an unexpected $1,000 expense. Of that number, 21% said they would go into debt by financing the spending with a credit card, while 16% would steeply cut back on other spending to bridge the gap. Another 10% would borrow from family and friends, 4% would take out a personal loan, and 5% said they would do “something else.”
Bankrate senior economic analyst Mark Hamrick tells Fortune that this survey is “disappointing because it is an indication that so many Americans are living paycheck to paycheck.” He said this is sadly consistent with earlier Bankrate research that found individuals’ two major financial regrets are the failure to save for emergencies and the failure to save for retirement.
Without requisite savings, 35% of respondents said they’d borrow the money, either from friends and family, a personal loan, or putting it on a credit card. The findings show an unsurprising generational gap, with about three out of five baby boomers saying they’d pay an emergency expense from their savings, while fewer than one-third of Gen Zers would do the same.
“It is understandable, to some degree, that those who are more established in their lives and personal finances might have that capability,” Hamrick says. “It also might reflect that more senior individuals have had sufficient experience with their finances that they understand that savings needs to be a priority.”
The reason most respondents cited for their lack of parachute? Inflation—followed close behind by rising interest rates and a recent change in employment status—is dissuading them from putting money aside. “Inflation’s once-in-a-generation surge has left its mark on American savings habits,” Hamrick wrote in the report. “There is a glimmer of hope, however; 19% of Americans cite rising interest rates as the reason they’ve saved more.”
People tend to save more when they expect a prolonged economic downturn. That’s “the ‘precautionary’ motive for saving,” economist Guillaume Vandenbroucke wrote for the St. Louis Fed in 2021. “If the downturn is not expected to last, people are likely to use their savings to maintain their consumption; that is, they will keep paying their rent, mortgage, and utility bills.”
But despite the larger pressures, they’re not satisfied with their situation; 57% of respondents said the current state of their savings is stressing them out. 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.
Even in economically uncertain times, paying down debt quickly—and contributing to emergency funds—must be a top priority, Bankrate advises, lest a loss of income throw a wrench in your plans. And it’s possible to multitask; just over a third of the study’s respondents said they’re currently prioritizing paying down debt and saving money in equal measure.
“For those wisely focused on managing and building their emergency savings, this is an opportune time to benefit from the increase in interest rates,” Hamrick wrote. “Emergency savings, by definition, need to be liquid or easily accessible. A high-yield savings account dedicated to this purpose amounts to a self-insurance policy guarding against unplanned expenses.”
The takeaway, Hamrick adds to Fortune, is that people at all life stages—and at all incomes—recognize the importance of avoiding “the pitfalls of insufficient savings.”
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FAQs
Most American adults don't have enough savings to pay an emergency $1,000 expense. Without requisite savings, 35% of respondents said they'd borrow the money, either from friends and family, a personal loan, or putting it on a credit card.
What percent of Americans can't afford $1000 emergency? ›
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.
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%.
Is $1000 a good emergency fund? ›
If you make more than $20,000, then aim for at least $1,000. Once you have paid down debt and can meet all of your other expenses, continue to add to your emergency savings account until you have enough so that you could live without a paycheck for six months.
How much money should a person have in emergency savings? ›
Income shocks tend to be more expensive and last longer than spending shocks. They also tend to happen less frequently. To prepare for income shocks, many experts suggest keeping enough money in your emergency fund to cover 3 to 6 months' worth of living expenses.
How many Americans struggle to pay bills? ›
According to the 2024 Financial Literacy Survey by GOBankingRates, 13% of Americans do not currently bring in enough money to cover their bills, and 46% barely bring in enough to cover their bills.
Do rich people need emergency funds? ›
There is research that substantiates the importance of having emergency funds to fall back on. Whether you have a billion dollar net worth or are working towards the $10,000 mark, the lesson is the same. Live within your means. No matter what your net worth or income, don't risk more than you can afford to lose.
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.”
Do 70% of Americans have less than 1000 in their savings? ›
The results show that, compared with previous year's findings, there's a growing percentage of people with little to no savings. In 2019, 69% of respondents said they have less than $1,000 in a savings account compared with 58% in 2018.
How much spare money does the average American have? ›
American households, on average, have $41,600 in savings, according to data last collected by the Federal Reserve in 2019. The median balance for American households is $5,300, according to the same data.
Probably not. Many financial experts recommend saving enough money to cover at least three to six months of living expenses. In today's expensive world, $1,000 won't buy much. For the average person, $1,000 likely won't cover one month of living expenses.
Do most Americans have no savings? ›
A stunning new Bankrate survey of 1,030 individuals finds that more than half of American adults (56%) lack sufficient savings to shoulder an unexpected $1,000 expense.
Is a millionaire's best friend? ›
It may sound like an intimidating term, but it really isn't once you know what it means. Here's a little secret: compound interest is a millionaire's best friend. It's really free money.
What is the 50/20/30 rule? ›
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
How much cash should you keep at home? ›
In addition to keeping funds in a bank account, you should also keep between $100 and $300 cash in your wallet and about $1,000 in a safe at home for unexpected expenses. Everything starts with your budget. If you don't budget correctly, you don't know how much you need to keep in your bank account.
How much should a 30 year old have saved? ›
If you're 30 and wondering how much you should have saved, experts say this is the age where you should have the equivalent of one year's worth of your salary in the bank. So if you're making $50,000, that's the amount of money you should have saved by 30.
How many Americans can't handle a $500 emergency? ›
Roughly 2 in 3 Americans Can't Cover a $500 Emergency.
What percentage of people stated they would not come up with $400 for emergency expenses without borrowing money or selling a possession? ›
YouGov found that today, 51% of respondents said they would exclusively cover $400 emergency expense completely using cash or its equivalent (cash in a checking or savings account and/or using a credit card that they pay off at the next statement), and 49% would not cover a $400 emergency expense using cash or its ...
What percentage of Americans live paycheck to paycheck? ›
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year.
What is the 50 30 20 rule? ›
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
