About 63% of Americans don’t have enough savings to cover a $500 emergency? The car brakes go on the fritz. The refrigerator stops refrigerating, or the dog earns himself a trip to the vet ER, after a brawl with the neighbors?
These are just three of any number of things that could go wrong during the course of the year. Recovering from any one will set you back about $500, which means these scenarios fall closer to the “undesirable inconvenience” category than they do the “massive calamity” one.
And yet, nearly two-thirds of Americans do not have enough money in savings to cover the cost of a single one of these unplanned expenses.
According to a brand new survey from Bankrate.com, just 37% of Americans have enough savings to pay for a $500 or $1,000 emergency.
The other 63% would have to resort to measures like cutting back spending in other areas (23%), charging to a credit card (15%) or borrowing funds from friends and family (15%) in order to meet the cost of the unexpected event.
It’s not news that Americans are spenders and therefore terrible savers. Sensing a trend? You should: America’s saving struggle has been a problem year after year.
As you move up the income spectrum, the median cost of unplanned expenses goes up, but the days’ worth of income necessary to pay for that expense goes down.
So for families making between $50,000 and $85,000, for instance, the median financial shock was $2,500 — or 13 days’ worth of income.
Families who reported $85,000 or more in household income were the ones most likely to see that $10,000 emergency, 26 days’ worth of income.
Zooming out and looking at the most typical types of unplanned expenses that a family can experience throughout a year.
The most common was a car repair — which puts us back in the $500 to $1,000 realm that Bankrate used in its queries. The one that just 37% of people said they’d pay for using savings.
Forbes / ABC Flash Point Poverty News 2019.