Bankrate Report Finds Only 44% of Adults in US Would Pay $1000 Emergency Expense from Savings
Bankrate’s annual emergency savings report found that only 44 percent of U.S. adults say they would pay a minimum $1,000 emergency expense from their savings, which is up one percentage point from the previous year. The most recent data polled from December 2023 also examines economic factors that Americans said are impacting their ability to save, and how worried they are about their emergency savings if they were to lose their main source of income.
“We indeed dodged the proverbial bullet as an often-predicted recession did not materialize during the last couple of years,” said Matt Hamrick, Bankrate’s senior economic analyst, according to The Hill. “The still robust job market continues to provide the foundation for the opportunity to save, bolstered by some of the best returns on savings in years. Now is the time to prepare for the unexpected by prioritizing emergency savings.”
35 percent of people surveyed say they would borrow to pay a $1,000 expense, either by financing with a credit card, taking a personal loan, or asking friends or family. 63 percent of respondents said inflation is causing the decrease in savings, down from 68 percent in 2023, while 45 percent said they were saving less due to rising interest rates.
Alternatively, 19 percent of people say rising interest rates are causing them to save more for unexpected expenses, as many Americans take advantage of savings accounts with higher interest rates. “Inflation’s once-in-a-generation surge has left its mark on American savings habits,” said Hamrick.
If they were to lose their primary source of income, 66 percent of respondents say they would be worried about having enough savings to cover a month’s worth of immediate living expenses. However, more people year-over-year had some degree of emergency savings in 2023; 30 percent in 2023 had some emergency savings, up from 27 percent in 2022.
Additionally, younger Americans are more likely to have little to no emergency savings. 31 percent of Gen Zers do not have emergency savings, while only 15 percent of baby boomers have no emergency savings. 47 percent of baby boomers have enough savings to cover at least six months of expenses, compared to just 13 percent of Gen Zers.
“It takes time to accumulate a sufficient emergency savings cushion, in large part because household expenses tend to increase until your peak earning years, making what constitutes an adequate cushion a moving target,” said Greg McBride, Bankrate’s Chief Financial Analyst.