Report: Most Americans Can’t Cover a $1,000 Unplanned Expense
Economics| | By Brad Kallet
If all of a sudden you were saddled with an emergency and had to pay $1,000, would you be able to do it?
If the answer is no, you should feel concerned. What you shouldn’t feel, however, is alone.
According to a new report released by consumer financial services company Bankrate, only 39 percent of Americans can currently pay for an unplanned expense of $1,000.
But wait, hasn’t the economy gotten better? Yes, it has, but we’re still digging ourselves out of a hole, and Americans just aren’t saving as well as they should.
“Even though unemployment is down and there’s been a recent uptick in wages, we aren’t seeing the needle move savings,” said Greg McBride, a chief financial analyst at Bankrate, according to CNN.
Unplanned expenses are far from rare. They crop up fairly regularly, as Bankrate noted that more than a third of American households had to pay an unexpected bill in 2017. About half of those were more than $2,500.
The experts at Bankrate recommend setting up an emergency savings fund, as that’s far more fiscally responsible than just putting an unplanned expense on your credit card. Not only does it have you prepared for those unforeseen bills and give you peace of mind, but it also saves you from potentially having to pay interest on a credit card expense.
McBride told CNN that when saving money for an emergency, the optimal goal should be to accumulate six months’ worth of living expenses.
“In the last recession we had nearly 7 million people who were out of work longer than six months,” the financial analyst told the website. “To someone who doesn’t have any or very little extra funds, accumulating six months of expenses sounds like climbing Mount Everest, but that is the destination.”
If you woke up tomorrow and found a $1,000 bill in your mailbox, could you pay it comfortably? How do you save for both the present and the future? SHARE your experiences with us in the comments, and send this along to those who need a reminder to save!