Most Americans are just one emergency — whether it's a car breakdown, medical bill or home repair — away from potentially falling into debt or facing major financial distress.
According to a new Bankrate report, routine curveballs often spell serious financial trouble for more than half of us.
Bankrate's yearly Emergency Savings Report revealed that nearly 60% of Americans couldn't cover a $1,000 emergency without scrambling for options, highlighting the widespread financial vulnerability many face today.
"We are essentially a paycheck-to-paycheck nation," Bankrate Senior Economic Analyst Mark Hamrick said in a statement. "Fewer Americans have the equivalent of a financial safety net to cover inevitable unexpected expenses, despite low unemployment and steady growth. This is one of the consequences of elevated prices stemming from inflation, the impacts of which are still being felt."
The survey found that just 41% of people could rely on their savings to handle an unexpected $1,000 expense, down from 44% last year. Over 2
in 5 (43%) say they would need to borrow the money in some form, including 25% who would turn to credit cards to cover such costs, putting them at risk of accruing high-interest debt that can spiral out of control.
The survey also found that younger Americans are particularly concerned about their savings, with 80% of Gen Zers and 72% of millennials worrying about covering immediate expenses.
Despite inflation cooling, many are still feeling the burn. Rising costs for essentials like rent, healthcare and groceries have stretched budgets thin, making it harder for families to put money aside for emergencies.
Over two-thirds (68%) say they are saving less for unexpected expenses because of inflation, while 47% blame elevated interest rates and 45% point to a change in income or employment status.
Nearly 3 in 4 Americans (73%) say at least one of these factors is causing them to save less for unexpected expenses. Additionally, more than 3 in 4 (76%) of Gen Xers and millennials are pointing to this as a reason for saving less.
Ultimately, many Americans are only one unexpected expense away from falling into debt or significant financial trouble. Bankrate says this reality shows that having a job isn't enough -- it's crucial to have a strong financial plan with room for emergency savings.
"We don't know what the future of the economy might bring, but an increasing share of people are anxious about potential job loss or interruption in income," Hamrick said. "By prioritizing saving, we can be better prepared for the unexpected and attain greater financial confidence and capability."