New study exposes finances of Americans: Most can't handle a $1,000 emergency expense (2024)

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New study exposes finances of Americans: Most can't handle a $1,000 emergency expense? ›

Bankrate found that only 44% of Americans surveyed could afford a $1,000 emergency expense. That number is actually up one percentage point from the previous year, the company said. Those 56% of Americans who couldn't weather the storm said they would address that unexpected emergency charge in other ways.

The majority of Americans (56%) cannot afford a $1,000 emergency expense, and over one-third (35%) say they would borrow the money in some form. That includes 21% who say they would finance it with a credit card and pay it off over time to cover the expense, down from 25% in 2023.

New study exposes finances of Americans: Most can't handle a $1,000 emergency expense. Planning for the unexpected is crucial since life doesn't always go as planned. But only 44% of Americans are prepared for a $1,000 emergency expense, according to a survey from financial analysis site Bankrate.

While nobody really wants to tap into their emergency savings, most Americans couldn't even afford to do so if they had to. A stunning new Bankrate survey of 1,030 individuals finds that more than half of American adults (56%) lack sufficient savings to shoulder an unexpected $1,000 expense.

Only 44% of U.S. adults would pay an emergency expense of $1,000 or more from their savings, as of December 2023 polling. 35% would borrow money, including 21% who would finance with a credit card and pay it off over time, 10% who would borrow from family or friends and 4% who would take out a personal loan.

How Much Should I Save for My Emergency Fund? Let's talk about how much to save for an emergency fund. That answer depends on a few things. Starter emergency fund: If you have consumer debt, you need a starter emergency fund of $1,000.

There is research that substantiates the importance of having emergency funds to fall back on. Whether you have a billion dollar net worth or are working towards the $10,000 mark, the lesson is the same. Live within your means. No matter what your net worth or income, don't risk more than you can afford to lose.

While the government may not be the one directly taking the money out of someone's account, they can permit an employer or financial institution to do so. If someone plans for debt and other required payments properly, chances are that money won't ever have to be removed from their account without their permission.

Roughly 2 in 3 Americans Can't Cover a $500 Emergency.

According to the 2024 Financial Literacy Survey by GOBankingRates, 13% of Americans do not currently bring in enough money to cover their bills, and 46% barely bring in enough to cover their bills.

Why are most Americans broke? ›

Experts Explain Why People Go Broke

It could be poor decision-making with credit, credit card abuse being one of the most challenging. It could be due to a lost job or a poor economy,” said Dr. Jacob Tenney, assistant professor and director of financial planning for the University of Charleston's School of Business.

According to the Federal Reserve's most recent Survey of Consumer Finances, the median savings account balance for all families was $8,000 in 2022. Savings account balances can vary greatly depending on income, age, education and race.

Fewer than half of Americans, 44%, say they can afford to pay a $1,000 emergency expense from their savings, according to Bankrate's survey of more than 1,000 respondents conducted in December. That is up from 43% in 2023, yet level when compared to 2022.

They don't need to sell stocks, which would trigger capital gains taxes. Instead, they can take loans against their shares. Securities based lending, securities based lines of credit, home equity lines of credit and structured lending are options for leveraging assets without selling them.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

Roughly 2 in 3 Americans Can't Cover a $500 Emergency.

How much money Americans have in their savings accounts—nearly half have less than $500. Nearly half of Americans have $500 or less in their savings accounts, an amount that leaves them vulnerable to unexpected expenses, according to a GOBankingRates survey of 1,063 U.S. adults conducted in November 2023.

How much should you save? While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months' worth of expenses.