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
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.
What percent of Americans have a $1000 emergency fund? ›
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.
Is $1000 a good emergency fund? ›
New study exposes finances of Americans: Most can't handle a $1,000 emergency expense. Planning for the unexpected is crucial since life doesn't always go as planned. But only 44% of Americans are prepared for a $1,000 emergency expense, according to a survey from financial analysis site Bankrate.
Do 30% of Americans have no savings? ›
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.
How much money should you have in savings for emergencies? ›
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.
What percent of 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 at least $1,000 saved? ›
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.
How many people can afford a $1000 emergency? ›
Only 44% of Americans can afford a $1,000 emergency expense, says Bankrate.
How many Americans have no savings? ›
As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Note: Not all percentages total 100 due to rounding.
What is the Dave Ramsey 1000 rule? ›
Baby Step 1: Save $1,000 for Your Starter Emergency Fund
In this first step, your goal is to save $1,000 as fast as you can. Your emergency fund will cover those unexpected life events you can't plan for.
The survey found that about 37% of retirees say they have no retirement savings, up from 30% in 2022, and only about 12% have at least the recommended $555,000 in savings. The high percentages of retirees with little to nothing saved may have to do with factors beyond their control.
How many white Americans don t have savings to retire? ›
Key Takeaways. On average, people of color in the U.S. have less money saved for retirement than their White counterparts. More than half of Black and Latinx households have no retirement savings, while only a third of White households lack savings.
How many Americans have at least 100k in savings? ›
Sources: Federal Reserve
But only about 12% have more than $100,000 in checking and savings.
Do 90% of millionaires make over $100,000 a year? ›
“Only 31% averaged $100,000 a year over the course of their career,” the study found, “and one-third never made six figures in any single working year of their career.” Just look at the story of former custodian Ronald Read for a perfect example.
How much does the average middle class person have in savings? ›
American households, on average, had $41,600 in savings, based on figures from the Federal Reserve in 2019. In 2022, that amount rose to about $62,500–which not only includes savings, but also assets from checking, money market accounts prepaid debit cards and more.
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 does the average American have in an emergency fund? ›
The GBR study revealed that half don't have any emergency savings at all. Those who do are most likely to have $1,000 or less, which isn't nearly enough to get the typical household through a single month — or possibly even a single vehicle breakdown or home repair.
What percent of people have an emergency fund? ›
As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Note: Not all percentages total 100 due to rounding.
How many Americans have $500 in savings? ›
According to the survey, 49% of Americans have $500 or less in their savings account, with 36% reporting they have less than $100 saved up.
How many Americans can afford a $500 emergency? ›
63% of workers unable to pay a $500 emergency expense, survey finds. How employers may help change that. Workers are reporting financial stress amid higher prices due to inflation and more expensive debt due to rising rates.
