Bankrate’s January Financial Security Index finds that fewer than only 39 percent of U.S. adults could pay for an unexpected expense of $1,000.
That means 4 in 10 people do not have enough savings to pay for car repairs, home emergencies, or medical treatment.
The survey reports that 18 percent of respondents would pay for the expense on a credit card. Another 18 percent said they could handle a surprise expense without borrowing, but would have to cut back on other things.
And 12 percent said they would borrow from family or friends, while 8 percent said they would take personal loans to pay for the surprise bill.
Only a third of millennials could turn to emergency funds to pay $1,000. By contrast, 46 percent of Gen Xers and 45 percent of baby boomers said they could cover a $1,000 emergency.
“The precarious state of Americans’ emergency savings has been further set back by the pandemic, with nearly as many needing to borrow to cover a $1,000 unplanned expense as those that can pay for it from savings,” said Greg McBride, CFA, Bankrate chief financial analyst.
The survey results underscore the importance of savings. Even with the financial troubles brought on by the COVID-19 pandemic, socking away a portion of every dollar in income is critical to financial health.