Report Sheds Light on Financial Condition of Many US Households
According to a WSJ article that was released earlier today titled "Most Americans Don't Have Savings To Pay Unexpected Bill", just 38% of Americans would have enough money in savings to cover an unexpected $500 car repair or $1,000 emergency room visit bill.
This comes despite the fact that an estimated 82% of Americans, according to the same report, keep a household budget.
So - for the people who don't have $1,000 in savings to cover an unexpected bill, how would they come up with the money? Here is the breakdown:
38% - pay the cost from savings
26% - Reduce spending
16% - Borrow from family/friends
12% - Use Credit Card
8% - Other
A few interesting things to note:
-it's hard to imagine that a household without $1,000 in a savings account would be able to cut enough from their budget in order to pay for the unexpected expense
-16% said that they would borrow from family/friends but given the fact that only 38% of Americans have enough savings to cover a $1,000 bill, how many family/friends would have enough money to lend out?
-8% of the respondents said that they wouldn't know what they would do if an unexpected expense arose
It is recommended that people have at least three months worth of savings in a "rainy day fund" for situations just like this.
The fact is, many people aren't willing to significantly scale back on their lifestyles in order to build a contingency fund. At the end of the day, many people (not all, of course) are more interested in vacations and big screen TVs and eating out frequently than in planning for the future.
Source: WSJ.com - Most Americans Don't Have Savings To Pay Unexpected Bill
Filed under: General Knowledge