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Most Americans Don’t Have $1,000 in Emergency Cash – CBS Pittsburgh

PITTSBURGH (KDKA) — Most Americans don’t have the cash to cover $1,000 emergency expenses, a new study reports.

Americans are not saving as much as they should.

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Let’s say your car is in urgent need of repair, or a family member is taken to the emergency room for care that is not covered by insurance, or your heater explodes in cold winter weather. This price. Can you easily lay your hand on at least a thousand dollars?

Greg McBride, lead financial analyst at bankrate.com, told KDKA editor Jon Delano: “Only 44% of Americans can afford that from savings.

Bankrate.com conducted research showing that the majority of Americans still haven’t set aside cash for emergencies, although the numbers are getting better.

“The good news is that this is actually higher than it was in the previous eight years that we looked at. The bad news, of course, is that it still means more than half of American households can’t afford that thousands of dollars in savings and will need to resort to something else,” McBride said.

“I think there’s a large segment of the population that feels financially vulnerable, and when faced with the prospect of a financial emergency, there’s going to be a fight,” said Stanford University professor Martha Deevy, associate director of the Center for Longevity, noted.

Deevy says that competition leads to suboptimal choices.

“Many people have access to other, suboptimal forms of emergency funding, whether it’s tapping into family, friends, or other less-than-optimal ways like short-term loans,” says Deevy. ,” Deevy said.

SEE: KDKA’s Jon Delano Report

Bankrate research shows that 35% will take out a loan, often using their credit card.

“Credit cards are going to be the number one choice people will use if they don’t have savings, and that’s especially worrisome in a year when we’re talking interest rates going up. So the cost of that credit card debt – often the most expensive that households have – will only get more expensive,” added McBride.

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Everyone needs an emergency fund, experts say.

“Emergency savings are completely different from retirement savings, and this is not/or. Both are very important,” says McBride.

It’s impossible to use retirement savings without penalty, says McBride, so you’ll need a separate cash account. How many, how much? Take how much you spend each month and multiply by six.

“You want to have enough to cover your expenses for six months, but I insist that it is a destination. McBride said.

Deevy says the need to set aside money for both retirement and emergencies is unique to Americans, because most American companies no longer offer pensions to retirees.

“So we just added another financial stressor to the US population,” says Deevy.

Most Western countries offer pensions and government-funded benefits to their retirees but working Americans are now forced to self-fund their retirement through 401ks and IRAs. while saving for emergencies.

“One of the things that has really changed about the savings landscape for Americans is when we moved from a pension-based retirement system to a defined-contributory retirement system and we put the responsibility on top of that. more personal.”

Personal responsibility means setting aside some cash each month for emergencies.

“Pay yourself first,” says McBride. “Don’t wait until the end of the month and try to save what’s left over because too often there’s nothing left over.”

If there’s any good news from this study, it’s that millennials today are saving more than their elders, Gen X’ers ​​and Baby Boomers.

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However, too much does not save much.

https://pittsburgh.cbslocal.com/2022/01/25/study-americans-emergency-savings/ Most Americans Don’t Have $1,000 in Emergency Cash – CBS Pittsburgh

CarmaHassan

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