1. PERSONAL FINANCE

Survey: Americans Can’t Cover Emergency Expenses

Survey: Americans Can’t Cover Emergency Expenses
BY John Russo
Mar 19, 2019
 - Updated 
Nov 5, 2024
Key Takeaways:
  • Only about half of people surveyed by Freedom Debt Relief have any emergency savings.
  • Experts recommend saving enough to cover at least six months of expenses in case you lose your income source.
  • Covering emergencies with credit cards is risky and expensive.

As a general rule, it’s smart to have at least 6 months of basic living expenses saved up in an emergency fund. These cash reserves can help you cover an unexpected expense, like a car repair or medical bill, without taking out a loan or using a credit card.

But many Americans are not following this rule. We asked people about their savings and debt in a recent Freedom Debt Relief survey, and it turns out that a surprising number have no emergency fund at all. And those who do have one may not be saving enough. Take a look at the numbers and why it’s so important to be able to cover emergency expenses.

How much are Americans saving?

Although the importance of having an emergency fund is widely accepted, only 53% of respondents reported that they actually have money set aside to cover emergency expenses. And even then, most aren’t saving enough to cover the recommended 6 months of expenses. In fact, a full 58% of respondents say they have less than $5,000 saved.

Shockingly, 51% of Baby Boomers have less than $5,000 saved even though they’ve reached or are quickly approaching retirement age. And prospects for Gen X seem even grimmer, with 62% having less than $5,000 in checking and savings combined.

What’s the risk of saving so little?

Without having savings to pay for unexpected costs, Americans are often forced to rely on credit cards to handle these expenses. And many Americans are already spread so thin that they use credit cards for simple everyday expenses, like food and utilities.

Falling back on credit cards for everyday expenses may be fine in the short-term, especially if balances are paid in full each month. But long term, relying on credit cards without having any savings could put people in financial danger. If they experience a reduction in their income or another unexpected expense, they might not be able to pay bills in full and could be be forced to enter a cycle of high-interest debt and fees they may not be able to get out of.

Do you have enough savings?

Americans seem to understand this danger, because our survey also shows how credit card debt takes a huge toll on their emotional well-being. In fact, 46% of those surveyed stated that they felt very stressed about their debt and 20% said they can’t sleep at night because of it. Here are some red flags that your debt might be getting out of control:

  • You can’t pay off your balance and are carrying credit card debt month to month

  • You constantly worry about getting your next paycheck so you can pay your credit card bills

  • You’re having trouble making your minimum payments

  • You’re maxed out on one or more of your credit cards

  • You have already fallen behind on credit card payments

If you’re so overwhelmed by credit card debt that you can’t sleep at night, it may be time to get debt help.

How to save more for emergency expenses

If you, like so many Americans, need to increase your savings, there’s no time like the present to get started. Start by taking a hard, detailed look at all of your expenses. There are usually many areas where you can cut unnecessary spending, sending that money to your emergency fund instead. Between cutting out cafe trips, excessive dining out, gym memberships, subscriptions, and the like, you’ll be surprised how quickly your emergency fund grows. Of course, the other side of the savings coin is increasing your income. If you’re able to add a side job or sell some of your things, your savings will grow even faster.

Give your finances a boost

Learning how to deal with debt, money, and saving for your future is important, but it doesn’t need to be hard. At Freedom Debt Relief, we’ve developed a simple to follow guide to help you find the tools you need to move to a better financial future. Get started by downloading our free guide right now.

Debt relief by the numbers

We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during September 2024. This data reveals the diversity of individuals seeking help and provides insights into some of their key characteristics.

Credit Card Usage by Age Group

No matter your age, navigating debt can be daunting. These insights into the credit profiles of debt relief seekers shed light on common financial struggles and paths to recovery.

Here's a snapshot of credit behaviors for September 2024 by age groups among debt relief seekers:

Age groupNumber of open credit cardsAverage (total) BalanceAverage monthly payment
18-253$9,117$254
26-355$12,438$340
35-506$15,436$431
51-658$16,159$467
Over 658$16,547$442
All7$15,142$424

Whether you're starting your financial journey or planning for retirement, these insights can empower you to make informed decisions and work towards a more secure financial future

Student loan debt  – average debt by selected states.

According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average student debt for those with a balance was $46,980. The percentage of families with student debt was 22%. (Note: It used 2022 data).

Student loan debt among those seeking debt relief is prevalent. In September 2024, 27% of the debt relief seekers had student debt. The average student debt balance (for those with student debt) was $48,703.

Here is a quick look at the top five states by average student debt balance.

StatePercent with student loansAverage Balance for those with student loansAverage monthly payment
District of Columbia34$71,987$203
Georgia29$59,907$183
Mississippi28$55,347$145
Alaska22$54,555$104
Maryland31$54,495$142

The statistics are based on all debt relief seekers with a student loan balance over $0.

Student debt is an important part of many households' financial picture. When you examine your finances, consider your total debt and your monthly payments.

Regain Financial Freedom

Seeking debt relief can be the first step toward financial freedom. Are you struggling with debt? Explore options for debt relief to regain control of your finances. It doesn't matter how old you are or what your FICO score or credit utilization is. Take the first step towards a brighter financial future today.

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