Study: Americans struggling to build emergency savings

Written on Apr 17, 2018

A new survey of middle-income adults found that of Americans who have managed to accumulate savings, 43% said their saving would last only a month or less.

NeighborWorks America conducted the survey in March, primarily focused on families with a household income of $75,000 or below.

Despite low unemployment and a growing economy in the U.S., approximately one-third (38%) of American households surveyed said they do not have emergency savings to cover the cost of car or home appliance repairs.

Forty-four percent of adults said that they had little confidence in their ability to weather an unexpected financial emergency. When meeting financial goals, the survey found that adults are struggling to put aside money to build their savings, let alone save for retirement or pay off credit card debt.

When meeting financial goals, the priority for 28% of those surveyed was paying bills, followed by 18% who said paying down credit card debt was most important. Twelve percent of adults in the survey said saving for an emergency was their most important financial goal, while just 8% considered saving for retirement as the most important goal.

Following a formal budget plan was not in the cards for 58% of those adults surveyed. An alarming 36% of participants surveyed indicated that they did not have a checking and savings account.

The survey showed a large gap in the ability of middle-income homeowners and renters to withstand financial emergencies. Fifty-seven percent of renters were not confident that they could withstand a sudden financial emergency, while only 31% of homeowners said they lacked confidence.

NeighborWorks recommends people should allocate 30% of their pay for housing when they look at their budget.

Oftentimes, individuals are victims of scams or identity thefts that tap their savings and credit cards. The survey said 21% of middle-income adults were victims of financial scams or identity theft. Even if these individuals had been able to avoid losing money to such scams, about 43% of those surveyed knew someone who had fallen victim to a financial scam.

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