One in Four Americans Are Unable to Cover an Unexpected Expense of $400
About 40 percent of Americans would be unable to cover an unexpected expense of $400, according to a recent report by the Federal Reserve. Although there have been improvements in the financial well being of many Americans, millions of people continue to live paycheck to paycheck.
“As this report shows, we continue to see the growing U.S. economy supporting most American families,” said Federal Reserve Board Governor Michelle W. Bowman. “Across the country, many families continue to experience financial distress and struggle to save for retirement and unexpected expenses.”
The report finds that approximately 61 percent of adults would be able to cover a $400 emergency with cash, savings, or a credit card that could be paid off within the month. Nearly 27 percent of adults would be forced to borrow or sell something while 12 percent would be completely unable to cover the expense.
In addition, about 17 percent of adults are currently unable to pay their monthly bills in full. Another 12 percent of adults would not meet their monthly bills either if they were hit with an unexpected expense of $400.
The Fed also took a look at the unbanked (i.e. adults who do not have a bank account). About 6 percent of the adult population are unbanked, but this number changes drastically depending on race. Whereas 14 percent of blacks and 11 percent of Hispanics are unbanked, only 4 percent of whites are unbanked.
The report is in its sixth iteration and derives most of its data from a survey conducted by Ipsos, a consumer research firm. This year’s survey included more than 11,000 responses taken from October 11 to November 12 of 2018.