Only 38% of Americans have enough money in their savings accounts to pay for unexpected expenses such as a $1,000 emergency room visit or a $500 car repair, according to a new Bankrate.com (NYSE: RATE) report. Others would raise the money by reducing spending elsewhere (26%), borrowing from family/friends (16%) or using credit cards (12%).
The ability to use savings for unexpected expenses increases with age, income and education level:
- 44% of senior citizens have enough savings to cover unexpected expenses, compared with 33% of millennials
- 62% of those with annual household income of $75,000+ have enough savings to cover unexpected expenses, more than two and a half times the number of people with annual household income under $30,000 who can say that
- 52% of college graduates have enough savings to cover unexpected expenses versus 32% of those without a college degree
The survey found that 82% of Americans keep a household budget, up from 60% in 2012. Even in this electronic age, most people keep a budget the old-fashioned way, either with a pen and paper (36%) or in their heads (18%). Just 26% use a computer program or smartphone app. While millennials are more likely to keep electronic budgets than older adults, even millennials favor non-electronic budgets.
“A solid majority of Americans say they have a household budget, which is a good thing. But too few have the ability to cover expenses outside their budget without going into debt or turning to family and friends for help,” said Claes Bell, CFA, Bankrate.com banking analyst.
“Also, with so many good budgeting apps, websites and computer programs out there, those relying on analog budgeting methods such as paper and pen, or simply keeping track of expenses in their head, could be missing an opportunity to make their budgeting easier and more effective.”
In terms of how people are spending their money, other than rent/mortgage payments, the most popular answer was utilities (such as electricity, water and phone bills), followed by transportation costs (including gasoline and car loans), medical expenses and student loans.
The survey was conducted by Princeton Survey Research Associates International (PSRAI) and can be seen in its entirety here:
PSRAI obtained telephone interviews with a nationally representative sample of 1,001 adults living in the continental United States. Interviews were conducted by landline (500) and cell phone (501, including 316 without a landline phone) in English and Spanish by Princeton Data Source from December 18-21, 2014. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.4 percentage points.
About Bankrate, Inc.
Bankrate is a leading publisher, aggregator, and distributor of personal finance content on the Internet. Bankrate provides consumers with proprietary, fully researched, comprehensive, independent and objective personal finance editorial content across multiple vertical categories including mortgages, deposits, insurance, credit cards, and other categories, such as retirement, automobile loans, and taxes. The Bankrate network includes Bankrate.com, CreditCards.com, InsuranceQuotes.com and Caring.com, our flagship websites, and other owned and operated personal finance websites, including Interest.com, Bankaholic.com, Mortgage-calc.com, CreditCardGuide.com, CarInsuranceQuotes.com, Insweb.com, CreditCards.ca, and NetQuote.com. Bankrate aggregates rate information from over 4,800 institutions on more than 300 financial products. With coverage of over 600 local markets, Bankrate generates rate tables in all 50 U.S. states. Bankrate develops and provides web services to over 100 co-branded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the Internet such as Yahoo!, AOL, CNBC, and Bloomberg. In addition, Bankrate licenses editorial content to over 500 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times, The Los Angeles Times, and The Boston Globe.