As the pandemic continues its march and job growth stalls, just 39 percent of Americans surveyed say they could comfortably cover an unexpected expense of $1,000.
Underscoring the shaky finances of many Americans, Bankrate’s January Financial Security Index finds that fewer than 4 in 10 U.S. adults could absorb the cost of a four-figure car repair or emergency room visit by tapping into savings.
Fully 18 percent of respondents said they would put the expense on a credit card and pay it off over time, incurring interest charges.
An additional 12 percent said they would borrow from family or friends, while 8 percent said they would take personal loans.
"The precarious state of Americans’ emergency savings has been further set back by the pandemic, with nearly as many needing to borrow to cover a $1,000 unplanned expense as those that can pay for it from savings," says Greg McBride, CFA, Bankrate chief financial analyst.
One key findings is that during booms and busts, the share of Americans struggling with financial instability has held steady.
The results of Bankrate’s surveys have remained consistent for years. Since 2014, the percentage of U.S. adults who would tap cash reserves to cover a $1,000 emergency has hovered between 37 percent to 41 percent.
The results echo findings from the Federal Reserve and the Pew Charitable Trusts. Both have reported that many Americans haven’t managed to stash away rainy-day savings, and therefore must rely on credit cards or borrowing from friends and family for an unexpected expense.
For households earning $75,000 or more annually, 58 percent have built enough of a nest egg to absorb a $1,000 hit, the Bankrate survey found. For households making less than $30,000, just 21 percent have a rainy-day fund to cover $1,000.
Age also matters. Only a third of millennials could turn to emergency funds to pay $1,000. By contrast, 46 percent of Gen Xers and 45 percent of baby boomers said they could cover a $1,000 emergency.
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