More than half of U.S. adults could not pay a $2,000 emergency bill from savings, the Federal Reserve's latest survey data shows, shining a light on the fragility of family finances despite a strong labor market.
What Happened: According to the survey of Household Economics and Decision-Making, only 48% said they would cover the expense with cash on hand. The rest would borrow, cut spending, or simply default.
Inflation tops the list of worries for the third straight year. 37% of respondents called rising prices their main financial challenge, up from 35% last year and four times the 2016 level. Separate Bankrate polling finds just 44% of households have enough savings to handle a $1,000 shock, a share that’s barely changed since 2022.
Savings gaps stretch wide. 18% of adults keep less than $100 set aside, 13% hold between $100 and $499, and another 10% sit in the $500-to-$999 range. Fed researchers say those figures mirror the 62% who still live paycheck to paycheck, a proportion LendingClub confirms in data from late 2023.
Why It Matters: Economists warn that the thin cushions leave households vulnerable to even modest setbacks. Personal-finance nonprofit NEFE notes growing support for mandatory high-school money courses after studies link class-takers to higher emergency funds and lower late fees. Twenty-three states now require the instruction, up from 17 before the pandemic.
Policymakers see mixed signals. The Fed report shows 55% of adults have rainy-day savings equal to three months of expenses, yet that share trails the 59% peak hit in 2021. With prices still climbing at 3% annually, CFPB data show late-payment rates on credit cards and auto loans are at their highest in years.
New York Times best-selling author Ramit Sethi, who also hosts Netflix’s new show “How to Get Rich,” urges families to automate transfers into high-yield accounts and aim for at least one month of expenses before tackling larger goals.
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