Only 44% of Americans can afford a $1,000 emergency expense, says Bankrate (2024)

SEATTLE, Wash. — Saving money is crucial - but how we spend that money is becoming a problem according to a study by Bankrate. According to the newest survey, only 44% of U.S. adults say they would pay an emergency expense of $1,000 or more from their savings.

That means the money is likely coming from credit cards. And, Bankrate Analyst Mark Hamrick says that is a problem.

“One of the worst options in managing through an unexpected expense is to have to borrow and among the borrowing that you can do is the costliest is to lean on credit card debt which only puts you farther behind in attaining your financial goals.”

Why is this happening? 63% of those surveyed blame rising inflation as the cause for saving less. 45% point the finger at rising interest rates. And, a shocking number reported having no savings at all.

“We really do risk some nasty outcomes here - 1 in 5 has nothing. Some people are really having a rough time of it with their money.”

Age also matters, Gen Z said it was most uncomfortable with its level of emergency savings while Baby Boomers were the most comfortable.

“We’re not living our best lives if we’re running out of money at the end of the paycheck because we’re trying to make our lives look good on social media.”

The ideal way to prepare for an emergency is to have 2-6 months of your salary put aside. A good idea is to have a direct deposit going into a separate account and a little bit out of each paycheck won’t feel like a burden and can save you in the long run.

Also, where you put your rainy day funds matter.

There are three things to consider:

  • Is your reserve protected from loss? In other words not in a risky investment.
  • Is it liquid so you can access it immediately.
  • Make sure you are earning a return to fight inflation.

“We just wish that more Americans would take the action Item from this survey and to prioritize emergency savings, particularly at a time when the returns on savings are some of the best we’ve seen In a generation,” says Bankrate.

©2024 Cox Media Group

Only 44% of Americans can afford a $1,000 emergency expense, says Bankrate (2024)

FAQs

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

Only 44% of U.S. adults would pay an emergency expense of $1,000 or more from their savings, as of December 2023 polling. 35% would borrow money, including 21% who would finance with a credit card and pay it off over time, 10% who would borrow from family or friends and 4% who would take out a personal loan.

What percentage of Americans can afford a $1000 emergency? ›

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

How much money is enough for emergency? ›

How much should you save? While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months' worth of expenses.

How much do experts recommend an emergency savings amount that covers ______________ of expenses? ›

While experts generally recommend building an emergency fund equal to three to six months' worth of expenses, this is only a guideline. Calculating your personal emergency savings goal requires having a clear picture of your financial situation.

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.

Do 45% of Americans have less than $1000 saved for an emergency? ›

But only 44% of Americans are prepared for a $1,000 emergency expense, according to a survey from financial analysis site Bankrate. While a percentage point higher than last year, most people still say they would be derailed by such a crisis.

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 many people can afford $1,000 emergency? ›

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 $1,000 enough for emergency fund? ›

How Much Should I Save for My Emergency Fund? Let's talk about how much to save for an emergency fund. That answer depends on a few things. Starter emergency fund: If you have consumer debt, you need a starter emergency fund of $1,000.

What percentage of people can't afford an $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.

What percentage of people would use their savings to cover an emergency expense of $1000 or more? ›

Only 44% of U.S. adults would pay an emergency expense of $1,000 or more from their savings, as of December 2023 polling. 35% would borrow money, including 21% who would finance with a credit card and pay it off over time, 10% who would borrow from family or friends and 4% who would take out a personal loan.

What is the average cost of an emergency expense? ›

The True Cost of an Unexpected Emergency

While the share of consumers who have faced an emergency expense is virtually unchanged from July 2022, the average cost to consumers of these expenses continues to inflate, growing 16% over last year — from $1,400 to $1,700.

How much money should you save for your emergency fund if your monthly expenses are $2000 month? ›

A common rule of thumb to follow is to have 3 – 6 months' worth of living expenses in your emergency fund.

Is 50 30 20 realistic? ›

The 50/30/20 rule can be a good budgeting method for some, but it may not work for your unique monthly expenses. Depending on your income and where you live, earmarking 50% of your income for your needs may not be enough.

How to budget $4,000 a month? ›

making $4,000 a month using the 75 10 15 method. 75% goes towards your needs, so use $3,000 towards housing bills, transport, and groceries. 10% goes towards want. So $400 to spend on dining out, entertainment, and hobbies.

What is the disadvantage of the 50 30 20 rule? ›

It may not work for everyone. Depending on your income and expenses, the 50/30/20 rule may not be realistic for your individual financial situation. You may need to allocate a higher percentage to necessities or a lower percentage to wants in order to make ends meet. It doesn't account for irregular expenses.

What percentage of Americans Cannot afford an 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.

Is $1,000 a good emergency fund? ›

How Much You Should Have in Your Emergency Savings. Here's a Dave Ramsey principle we agree with: If you make less than $20,000 per year, aim to have at least $500 in emergency savings. If you make more than $20,000, then aim for at least $1,000.

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.

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