- Nearly a quarter of Americans have zero savings to pay for emergency situations, according to a new survey by financial services company Bankrate
- Only 31% of Americans have an ‘adequate’ amount of emergency funds, equivalent to six or more months’ worth of expenses money
- 27% of young millennials, ages 18 to 26, said they had three to five months’ worth of money saved for situations like layoffs or medical bills
Nearly a quarter of adult Americans have zero savings to pay for emergency situations including a layoff or major medical bills, new research has revealed.
Bankrate’s newly released June Financial Security Index survey indicates that 24% of Americans have not saved any money at all for their emergency funds.
This is despite experts recommending that people strive for a savings cushion equivalent to the amount needed to cover three to six months’ worth of expenses.
Surprisingly, Bankrate says that this is a good thing — the percentage of people with zero savings for a financial emergency is actually now at its lowest rate since the financial services company began polling in 2011.
The June survey also found that 31% of Americans have what Bankrate considers an ‘adequate’ savings cushion — six or more months’ worth of money to pay expenses — which means that nearly two-thirds of the country isn’t saving enough money.
Still, Bankrate notes, 31% of people with adequate savings marks a vast improvement over the last seven years and is the highest percentage of people with that level of savings.
Bankrate broke down its survey results to distinguish between baby boomer and millennials’ savings habits.
Of the 1,003 adults surveyed, the financial services company found that young millennials — ages 18 to 26 — frequently fell into the category that saved three to five months’ worth of expenses money.
Of the young millennials polled, 27% said they had three to five months’ of emergency expenses money saved, as compared to only 11% of baby boomers who’d saved the same amount of money.
After witnessing their parents struggle during the recession, young millennials
“are trying to be savvier with their money,” consumer savings expert Andrea Woroch told Bankrate.
Where baby boomers fared significantly better, however, was in the six months’ or more category of emergency funds. There, boomers clocked in at 38% with that amount of savings, versus 23% of millennials.
For those falling short on the emergency savings front, president and owner of Century Financial, Brian White, told Bankrate that any extra money earned — including windfalls like work bonuses — should be put into a high-yield savings or money market account, instead of being spent on things like new cars or unnecessary home renovations.