More than Half of Americans Could Not Cover a Surprise $400 Expense, New Survey Finds

May 12, 2023Financial Literacy, News

A recent poll conducted by Morning Consult for Bloomberg News found that most Americans would not be able to cover a surprise $400 expense without going into debt. Roughly one-third of respondents said they have the financial resources to cover the expense, and that figure increases to 48 percent when including Americans who said they would use a credit card and immediately pay off the balance to avoid interest charges.

“We’ve had two really strong years of jobs growth and there has been a lot of coverage of wage compression, with lower-income earners actually experiencing more rapid wage growth,” said chief economist at Morning Consult John Leer. “And despite all of that, there is still a group of predominantly lower-income adults who are extremely vulnerable.”

Among those who said they were not in any financial state to cover the expense, most said they would borrow through cards or another kind of debt, while 17 percent of respondents said they would not be able to pay the expense at all. The data shows that most Americans could be pushed into taking on debt by somewhat common events like auto repairs or medical bills.

The inability to pay an unexpected $400 expense is not exclusive to the lowest-income households, as nearly 20 percent of the households earning between $50,000 and $100,000 annually said they couldn’t cover the expense without taking on debt. Only 8 percent of respondents who make over $100,000 annually said they couldn’t cover the expense.

The poll also revealed that surprise expenses are not that rare, as 56 percent of respondents said they had an emergency expense in the past month. The most common surprise expense was auto-related costs, followed by medical bills, and the median size of these expenses was $483.

Sofia Baig, a Morning Consult economist, said that the evolving structure of the labor market may be contributing to uncertainty with income and budgeting. As more people rely on gig work, they also depend on unscheduled and more expensive childcare, which she said adds to financial strains.

Pin It on Pinterest