If their car conked out, most Americans wouldn’t have enough in savings to pay up. Almost six in 10 don’t have enough savings to settle a $500 car repair or a $1,000 emergency room bill.
That’s according to a new Bankrate.com report that also found that 21 percent would finance the unexpected expense on a credit card, 20 percent would reduce spending on other things and 11 percent would borrow from family or friends. Only 41 percent could dip into their savings.
“It’s not a matter of if, but when an unexpected expense will pop up,” said Jill Cornfield, Bankrate.com analyst. “Our survey shows that just under half of adults surveyed said they or a family member had a major expense in the past 12 months.”
And it’s not just lower-earning workers who have a savings shortfall. Almost half of the highest-income households ($75,000-plus per year) and college graduates lack enough savings to pay the bill.
Of the generations polled, millennials are the most equipped generation to pay up, with 47 percent saying they would use their savings to cover such an expense, up from 33 percent in 2014. The Silent Generation is more likely to use a credit card than any other generation, part of a three-year trend showing more people overall are relying on credit cards to finance an unexpected expense.
Americans are willing to cut back, however. When money gets tight, dining out is the first luxury to go, with 59 percent saying they are very or somewhat likely to cut back on restaurant meals. Respondents were much more hesitant about disconnecting: just 35 percent are very or somewhat likely to let financial shortcomings affect their cellphone plan, the lowest of the six choices that were offered.