NEW YORK–The economy and job markets have both markedly improved, but most Americans still aren’t socking away any savings and are unprepared for a financial emergency, according to a new survey.1,000 people in late December about their levels of preparedness for unexpected emergencies. The survey found that four in 10 of those surveyed encountered an unexpected expense in 2015, and that just 57% made it out of 2015 financially unscathed.
Among the findings in the Bankrate.com survey:
- Nearly four in 10 respondents, 37%, say they would pay for an unexpected expense with savings, Bankrate's survey found. That's about the same as December 2014, when 38% of people answered the same way.
- Nearly a quarter of people, 23%, reported they would pay for an emergency by reducing spending on other things.
- Credit cards would be an option for 15% of respondents. The same number said they would borrow from family or friends.
- As Bankrate.com noted, not surprisingly, in its survey those with higher incomes were most likely to say they would rely on savings for emergencies. Over half, 54%, of those earning $75,000 or more annually said they would pony up the cash for an unexpected expense.
- Only 23% of people with yearly incomes less than $30,000 said they would use savings. And 9% of respondents in this income level said they don't know how they would pay for an unexpected expense.
Bankrate.com said that “Millennials changed up their answers from last year,” while noting the trends for older generations were mostly unchanged.
“In 2014, many more young people said they would have to reduce their spending to pay for an emergency,” Bankrtae.com said. “In this year's survey, Millennials were most likely to say they would use savings. More also indicated they would use a credit card, while fewer said they would need to reduce spending to meet an unexpected expense.”
Other findings:
- When asked how they had dealt with their most recent unexpected expense, 36% of respondents said they used savings. Another 20% said they dealt with it by setting up a payment program.
- About one in 10 said they borrowed from family and friends, while another 11% said they haven't begun paying the bill.
- Only 13% paid for their most recent emergency expense with a credit card.
Bankrate.com said that to understand how Americans bolster their savings, it asked respondents how likely they would be next year to cut back on spending in five categories: dining out, coffee, cable or satellite TV, alcohol and cellphone plans. The responses to that question can be seen below.