44% of Americans can't pay an unexpected $1,000 expense from savings. ‘We're just not wired to save,’ expert says (2024)

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When faced with an unexpected $1,000 expense, more than one-third of Americans would borrow the money, according to a new Bankrate survey. That may include tapping their credit cards, seeking money from friends or family or taking out a personal loan.

Most would not turn to cash savings because they don't have it, the personal finance website found.

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.

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"We're just not wired to save," said Brad Klontz, a certified financial planner and expert in financial psychology and behavioral finance. Our brains are instead programmed to focus on our immediate needs.

Saving "goes against our natural instincts," said Klontz, who is a member of the CNBC Financial Advisor Council.

But there are steps you can take to rewire how you think about savings and meet your goals.

Why Americans are prone to 'financial fragility'

Almost two-thirds of respondents, 63%, say high inflation has left less room to save for emergencies. Meanwhile, just 19% say they are saving more because of high interest rates.

"There's a persistence of fragility in American society," said Mark Hamrick, senior economic analyst at Bankrate.

"There's more financial fragility out there than I think is widely understood," he said.

44% of Americans can't pay an unexpected $1,000 expense from savings. ‘We're just not wired to save,’ expert says (1)

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The Covid-19 pandemic, which prompted millions of Americans to seek help from food banks amid widespread layoffs and furloughs, is one example of how a sudden income loss can make it impossible to pay for everyday needs, Hamrick noted.

Living paycheck to paycheck has become the norm for many Americans, research has found. That leaves people little to no opportunity to save.

To build a cash cushion, the best advice is to start with your current budget and adjust your spending. Where you can, save first and spend second, Hamrick said.

Experts generally recommend having three to six months' living expenses set aside to protect against unexpected events.

Yet, year after year, surveys show building meaningful emergency savings remains a difficult hurdle for many Americans.

How to reframe how you think about saving

To successfully boost emergency savings, it may help to reframe the way you think about that goal, Klontz, said. What may help to overcome that is to visualize, which helps create an emotional experience that can help activate behavioral change.

For example, picture a worst-case scenario such as losing your job, Klontz suggested.

If that income stopped tomorrow, how many months would you have before your belongings are out on the street, or until you have to call a friend or relative to beg to stay with them? Or how long before you start withdrawing money from your retirement funds? How long would it delay your retirement?

By tapping into how those situations would make you feel, you become emotionally invested in taking action, Klontz said.

The next step is to identify ways to stop spending money and direct it toward an emergency fund, which admittedly can be a "painful exercise" for many Americans, Klontz said.

Instead, many people tend to think of their credit cards as an emergency fund, which may lead them to pay interest rates of 20% or more if they use it to cover an unexpected event and do not pay it off in the first month.

Likewise, if you keep a surplus of cash in your checking account, you're more likely to spend it, Klontz said.

Another way to help encourage savers to take action is to name the emergency fund something emotionally triggering, Klontz said, such as "financial security fund" or "financial freedom fund."

By labeling the money something that's associated with an emotional attachment such as financial security, you'll be less likely to dip into that money to go out to eat, Klontz said.

That "psychological barrier" may help protect the emergency fund money, he said.

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44% of Americans can't pay an unexpected $1,000 expense from savings. ‘We're just not wired to save,’ expert says (2024)

FAQs

44% of Americans can't pay an unexpected $1,000 expense from savings. ‘We're just not wired to save,’ expert says? ›

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.

What percent of the US population has less than $1000 in their bank accounts right now? ›

Americans today are lacking crucial savings needed for managing short-term emergencies and building long-term wealth. According to a rolling representative online survey among U.S. adults by YouGov, 27 percent of Americans had some savings below $1,000 as of May 2023, while 12 percent said they had no savings at all.

What percentage of Americans could not pay a surprise bill of $400 with cash equivalent? ›

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.

How many Americans have $5,000 in savings? ›

About 29% of respondents have between $501 and $5,000 in their savings accounts, while the remaining 21% of Americans have $5,001 or more. Few hold much cash in their checking accounts as well. Of those surveyed, 60% report having $500 or less in their checking accounts, while only about 12% have $2,001 or more.

How many people have $10,000 in savings? ›

Majority of Americans Have Less Than $1K in Their Savings Now
How Much Do Americans Have in Their Savings Accounts?
$1,001-$2,00010.60%9.81%
$2,001-$5,00010.60%10.64%
$5,001-$10,0009.20%9.51%
$10,000+12.60%13.48%
4 more rows
Mar 27, 2023

Do 40% of Americans have less than $1000 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.

What percent of Americans don't have 1000 in savings? ›

As of December 2023, more than half of Americans wouldn't pay for a sudden $1,000 bill from their emergency savings. The majority (56 percent) of U.S. adults wouldn't pay for an emergency expense of $1,000 or more, such as an emergency room visit or unexpected car repair, from their savings account.

How many Americans can afford a $1000 unexpected expense? ›

Only 44% of Americans can afford a $1,000 emergency expense, says Bankrate.

How many Americans can't afford $400 emergency? ›

The $400 Question

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. Only 13% of all households said they could not come up with $400 at all.

Are 40% of Americans struggling to pay their bills right now? ›

The percentage of Americans experiencing financial hardship steadily increased, reaching a new high of nearly 41 percent in October 2022. The census survey results did not meaningfully improve over the following year.

How many Americans have $100,000 saved? ›

14% of Americans Have $100,000 Saved for Retirement

Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.

How many Americans have $500,000 saved? ›

In 2022, about 46% of households reported any savings in retirement accounts. Twenty-six percent had saved more than $100,000, and 9% had more than $500,000.

How many Americans have $50,000 saved up? ›

Many Americans have a long way to go when it comes to affording retirement. According to the survey, 53% have less than $10,000 saved. Not far behind them is the 15% of Americans who have between $10,001 and $50,000 saved. Going up a little more, just 6% have between $100,001 and $200,000 saved.

How many Americans have $300,000 in savings? ›

More Than Half of Americans Have Less Than $10,000 Saved

Going up a little more, just 6% have between $100,001 and $200,000 saved. Few Americans have saved more than $300,000: 4% have between $350,001 and $500,000.

How many Americans have $200,000 in savings? ›

9% of Americans have between $100,000 and $200,000 saved, and 4% have between $200,000 and $350,000 saved.

How much money does the average 40 year old have in the bank? ›

Average Savings By Age
Age RangeAccount Balance
Under age 35$11,250
Ages 35-44$27,910
Ages 45-54$48,200
Ages 55-64$57,670
2 more rows

What percentage of people have $1,000 dollars in the bank? ›

Another 11% have a balance between $500 and $999 and 23% said they have between $1,000 and $4,999. All of these figures are well below the $6,081 that the average American household spends in a month. About one third of survey respondents said they had more than $5,000 in their checking account.

How many people don't have $1000 saved? ›

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.

What percentage of Americans have less than $500 in the bank? ›

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. While inflation has steadily improved since the June 2022 peak of 9.1%, borrowing rates and consumer prices are still much too high and real wages too low.

What percent of Americans have less than $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.

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