By Melina Druga, Financial Regulation News
Less than half of Americans, 47 percent, have sufficient liquidity or access to funds to cover a $1,000 emergency expense, according to a survey-based report conducted by Bankrate and its polling partners.
When asked how they would pay for an emergency expense of $1,000 or more, 33 percent of survey participants said they would go into debt through a credit card, a personal loan or borrowing from family or friends; 30 percent would use their savings; 17 percent would rely on their regular income or cash flow, and 20 percent would reduce spending to pay for it or take a different approach.
“Most folks in America live paycheck-to-paycheck,” Mark Hamrick, Bankrate senior economic analyst, said. “This either results in, or coincides with, a lack of liquidity and lack of ability to achieve success with other key financial goals such as paying down debt or saving for emergencies and retirement.”
Other survey findings include:
- When asked what is causing them to save less for emergencies, 54 percent of respondents said inflation followed by changing income/unemployment, 26 percent, and recent interest rate cuts, 17 percent.
- If they were to lose their primary source of income tomorrow, 43 percent said they would be “very worried about covering living expenses.”