It’s January and maybe you have a plan of how you’d like the year to work out. Does your plan include an automatic withdrawal from your paycheck into a savings account each month, because if not, your year might be ruined?
Most people aren’t ready for that dreaded, “Oh NO!” A new survey finds only 40% of Americans could cover a $1,000 unexpected emergency. Ready to say, “Oh no!?” The average emergency is $3,750.
“Living beyond your means is one of the main reasons people don’t have sufficient emergency savings. Another reason is just not prioritizing savings,” says Bankrate.com Chief Financial Analyst Greg McBride.
Millennials and Gen-Xers are inclined to borrow the money, presumably from their Boomer parents, who are inclined to put it on a card and pay it off.
The survey finds 15% of Americans put those unanticipated costs on a credit card, while 6% take out a personal loan from a bank and 13% tap friends and family. 14% cut back on other expenses and make do. 5% stand frozen, without a clue.
“The ultimate destination where you can really feel comfortable about your emergency savings is when you can cover six months’ worth of expenses,” says McBride.