Only 44 % Of Americans Could Cover Unplanned $1,000 Expense From Savings, Survey Finds
A recent Bankrate survey found that just 44 percent of Americans could cover an unexpected $1,000 expense from savings, like a car repair or emergency room bill. This is the highest in eight years of polling and represents an improvement from the 39 to 41 percent range that was found from 2017 to 2021.
“While the ability to cover an unplanned $1,000 expense from savings is the best we’ve seen over the past 8 years, the majority of Americans still cannot afford to do so,” said Greg McBride, Bankrate’s Chief Financial Analyst. “The reliance on borrowing is still high, with more than one-third of households having to turn to a credit card, personal loan, or family and friends in the face of unplanned expenses.”
Almost 35 percent of Americans would need to borrow money in some way to cover an unplanned $1,000 expense. 10 percent said they would borrow from family and friends, 20 percent would finance the expense with a credit card and pay it off over time, and 4 percent would take out a personal loan to cover the expense.
Nearly half of participants—49 percent—said that inflation affects their saving for unplanned expenses, while only 16 percent said inflation is helping them to save more. 33 percent said that inflation has had no impact on their ability to save for an unplanned expense.
Younger millennials between ages 26 and 32 were most likely to finance an unexpected expense with a credit card at 27 percent, compared to 19 percent of Gen Z, Gen X, and baby boomers. More than half of millennials and Gen X said inflation is causing them to save less, compared to 36 percent of Gen Z respondents.
Additionally, Bankrate found a correlation between the ability to pay an unplanned expense and educational attainment and income. 59 percent of college graduate households can cover an expense compared to 34 percent with no more than a high school diploma. Also, 60 percent of households with incomes of $50,000 or more could cover an unplanned expense.