America has an emergency preparedness problem, with less than half of all adults having enough cash to handle 90 days’ worth of household expenses, according to a recent Bankrate study.
Additionally, 24 percent of Americans don’t have any emergency savings, and 33 percent have more credit card debt than emergency savings. That’s up from just 22 percent in 2022.
Not having enough emergency savings will likely trigger more angst in the U.S. households who are trying to make ends meet in a rollercoaster economy.
“More emergency savings equates to peace of mind,” Bankrate chief financial analyst Greg McBride said in a statement. “The majority of Americans feel they’d need enough to cover at least six months’ expenses to feel comfortable, including 65 percent of those that have already saved between 3-5 months’ expenses and 58 percent of those that have some savings, but not yet enough to cover three months’ expenses.”
U.S. consumers are taking a big risk by opting out of emergency savings.
Tips to Catch Up on Emergency Savings
With savings levels down and consumer anxiety up, how can American households rebound and start amassing an emergency savings account that can at least cover a major issue like a layoff or a serious illness?Start small and make it automatic
Even a little bit of cash can get your cash savings program up and running.Personalize the savings experience
Slap a name on the account like “Family Safety Net,” so you stay motivated. “Most people have small leaks they can plug without overhauling their lifestyle,” Kovar noted. “And if you have a partner or kids, involve them. When everyone understands the goal, it becomes something you’re building together.”Treat the account like a non-negotiable bill
Time is your ally when building an emergency savings account, so get going. “Don’t wait for ‘extra’ money to save, build it into your budget first,” said Barbara L Smith, founder at Luminous-Resilient LLC in Iselin, New Jersey, who works with single mothers on money management issues, via email.Struggling savers can also try treating emergency savings like rent, which should also be deemed automatic and non-negotiable,” advised Beth Southorn, executive director of LifeSTEPS, a California-based nonprofit organization that works with families on key household financial issues.
“We help residents set up micro-savings accounts that pull $25 weekly before they see their paycheck. Small amounts prevent massive housing disruptions.”