A new survey by Bankrate found just 39% of Americans say they have enough savings to cover an unexpected expense of $1,000.
For example, that money could cover anything from a surprise emergency room visit to a car repair.
About 18% of respondents said they would put the expense on a credit card and pay it off over time, incurring interest charges. Another 18% said they could handle a surprise expense without borrowing, but they would have to make room in their budgets.
An additional 12% said they would borrow from family or friends, while 8% said they would take personal loans.
Bankrate says age makes a difference, with only a third of millennials saying they could turn to emergency funds to pay $1,000. Meanwhile, 46% of Gen Xers and 45% of baby boomers said they could cover the grand.
The survey’s findings are on trend with similar studies conducted over the past few years. Since 2014, Bankrate says the percentage of U.S. adults who would tap cash reserves to cover a $1,000 emergency has hovered between 37% to 41%.
And while the COVID-19 pandemic continues to intensify and stall job growth in the United States, Americans are still optimistic that 2021 will be better for their finances than 2020. About 44% told Bankrate they believe their finances will improve. That includes 12% who say their fortunes will get significantly better and 32% saying they will get somewhat better. Just 14% expect their finances to get worse.
“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.
Bankrate’s survey was conducted from Dec. 8 to Dec. 13, 2020. It sampled 1,003 respondents through phone interviews. The margin of error for total respondents is +/-3.58%.
