Majority of Americans lack enough savings to handle $1,000 emergency
Washington, D.C., United States (AHN) – The majority of Americans do not have enough money to deal with a $1,000 emergency, according to the National Foundation for Credit Counseling’s (NFCC).
NFCC conducted an online poll in July that found 64 percent of Americans would have $1,000 in savings to cover an unplanned expense and they would have to use some other source of money to cover it.
Nearly 2,700 people participated in the poll.
To resolve the problem, 17 percent of the respondents said they would borrow money from family or friends, 17 percent said they would have to neglect an existing financial obligation to come up with money for an emergency, 12 percent said they would have to pawn or sell an asset and 9 percent each said they would take out a loan or a cash advance from a credit card.
Only 36 percent of respondents said they tap a savings account to obtain funds for an unplanned expense.
Although using rainy day funds for emergency expenses is the best option to protect a person from the unknown and the reason to establish savings to begin with, it is likely that with high unemployment and underemployment and decades of stagnant or declining wages that many respondents no longer have enough money to save or they have already had to use all their emergency savings.
But the 64 percent who would not be able to tap savings to deal with an unplanned $1,000 expenditure are on shaky ground.
“Without adequate savings, consumers have poor resolution choices when an emergency arises,” said Gail Cunningham, spokesperson for the NFCC. “People often say they can’t afford to save, but the truth is that they can’t afford not to.”
However, Cunningham says it’s important to try to get in better financial shape.
“Selecting any option other than taking the money from savings should be a red flag,” continued Cunningham. “If saving money has always seemed out of reach, there is no better time than now to get to the root of the problem and protect yourself, your family and your financial future”
A study earlier this year by the National Bureau of Economic Research had found that 50 percent of Americans would have trouble coping with a $2,000 emergency.
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