Tuesday, July 2, 2024
"Not all surprises are good, and people know it," stated Rebecca Rickert, head of communications at Empower. "The study suggests financial precarity at a time when household finances may be stretched due to rising prices and inflation. Life happens, and people are stressed about the surprise expenses that could tip them off-balance."
The study highlighted that 25 percent of Americans had to dip into their emergency savings to cover basic living expenses within the past year. The median emergency savings stands at $600, with men typically saving more than women—$1,000 compared to $500, respectively.
Despite the economic hardships, 62 percent of respondents view having a dedicated emergency savings fund as a priority. However, nearly half (47 percent) reported that their regular monthly expenses are too high to allow for any savings. This financial strain is exacerbated by rising prices, which 57 percent of Americans cite as a barrier to building their emergency funds.
Americans acknowledge the importance of being able to handle unexpected financial needs, which many associate with a sense of "Financial Happiness." Nearly half (43 percent) of Americans, and 51 percent of baby boomers, have contributed to their rainy-day fund in the past year, although only 14 percent do so regularly. A hopeful 34 percent believe they could handle any emergency expenses that might arise.
The survey also revealed the stress associated with financial uncertainty, with over half (54 percent) of Americans worrying about how they would pay for unexpected expenses. Millennials are the most anxious, with 60 percent expressing concern. The primary reasons for tapping into emergency savings include car expenses (21 percent), home repairs (21 percent), medical expenses (19 percent), debt payments (17 percent), and job loss (10 percent).
Interestingly, paying down debt is a higher priority than saving for an emergency for 57 percent of Americans. As for where they keep their emergency funds, 30 percent of adults prefer cash, while 33 percent are opting for high-yield savings accounts to grow their money.
These insights are part of Empower's "In Case of Emergency" study, which is based on responses from 1,192 Americans aged 18 and older, collected by YouGov between April 12 and 15, 2024. The survey, Empower stated, is nationally representative of U.S. adults.
Empower, a specialist in financial planning, investing and advice, is dedicated to fostering financial freedom through innovative technology and personalized guidance.
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