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24% of Americans lack the savings to cover a $250 emergency expense

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Our latest research report aimed to measure what the average consumer has stowed in personal savings.

1,500 adult Americans were surveyed, the subsequent data was analyzed, and the final results showed most people have a concerningly low amount of money in the bank.

24% didn't have enough personal savings to cover an emergency $250 expense. 47% couldn't cover a $1,000 expense.

If they suddenly stopped earning an income, nearly one-third of employed respondents could not cover expenses past the first four weeks using both their personal savings and debt.

The impacts of living paycheck-to-paycheck were far-reaching. 61% are reducing their holiday budget this year, while 53% would have already quit their current jobs to explore other career opportunities if they had the savings to do so.

Starting with what we're dubbing the "American Savings Staircase," let's dive into the data.

The American Savings Staircase

Note: If you'd like to see the raw data or data broken down by state, gender, race, age, etc., please email me at [email protected]

1,500 respondents were asked a progression of questions with this structure: Do you have enough personal savings to cover an emergency $XXX expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

For the amounts, we started at $250 and ended at over $10,000.

Here's how the results came in:

  • 24% couldn't cover a $250 expense (34% of women, 15% of men)
  • 35% couldn't cover a $500 expense (46% of women, 25% of men)
  • 47% couldn't cover a $1,000 expense (57% of women, 38% of men)
  • 54% couldn't cover a $1,500 expense (63% of women, 45% of men)
  • 58% couldn't cover a $2,000 expense (67% of women, 50% of men)
  • 62% couldn't cover a $3,000 expense (70% of women, 55% of men)
  • 67% couldn't cover a $5,000 expense (75% of women, 59% of men)
  • 70% couldn't cover a $7,500 expense (78% of women, 63% of men)
  • 73% couldn't cover a $10,000 expense (81% of women, 65% of men)
  • 75% couldn't cover an expense over $10,000 (83% of women, 67% of men)

We promise the Americans Savings Staircase makes more sense when presented as a bar graph (switch tabs to see gender breakdowns):

Once the hypothetical emergency expense reached $1,500, the majority of consumers were unable to cover that amount with only personal savings.

By gender, the results were eye-catching; female respondents are lagging behind male respondents when it comes to personal savings by a significant margin. For example, 57% of women couldn't cover a $1,500 expense compared to 38% of men.

The impacts of having next to nothing saved in the bank are fairly blunt. Living paycheck-to-paycheck puts a consumer's everyday life on a razor's edge. There's no margin for error; you're one emergency medical expense or random life event away from a never-ending debt cycle or even permanent financial ruin.

It's not only stressful, but it can make milestones like buying a house simply unattainable.

For respondents living paycheck-to-paycheck (unable to cover a $3,000 or less expense), minimal personal savings has impacted career development and will impact 2021 holiday shopping.

At least 61% reducing 2021 holiday budget

The 2021 holiday season is fast-approaching and that means spending, spending, spending.

We deemed the 932 respondents (62%) that couldn't cover a $3,000 or less emergency expense as living paycheck-to-paycheck. For this group, at least 61% are reducing their holiday budgets this year.

With 14% opting not to answer, the percentage of respondents cutting back the 2021 holiday budget could be even higher than 61%.

Following up with the same group of poll participants, we next asked how much of their holiday expense will be financed via debt (i.e. credit card, personal loan, etc.).

  • The average respondent will finance 38% of their holiday expense with debt.

Living paycheck-to-paycheck sometimes leaves debt as the only way to keep going, which in turn can create even worse problems stemming from a growing debt balance, overwhelming interest charges, and a damaged credit score.

At the end of this holiday season, many paycheck-to-paycheck consumers will be heading into 2022 with a significant debt problem that will only make a tight lifestyle even tougher to squeeze by.

Living paycheck-to-paycheck keeps 53% of respondents at same job

The financial consequences of living paycheck-to-paycheck are easier to understand, like not being able to buy more holiday presents.

However, we found there are other impacts, namely career development.

For reference, this question was only asked to employed respondents who are living paycheck-to-paycheck as deemed above (couldn't afford $3,000 or less emergency expense).

The majority of this group are remaining at their current job because they don't have the financial resources to be able to leave one job without already having another one lined up.

They depend on each and every dollar from each and every paycheck and would struggle to afford life if they quit and the paychecks stopped. There's no guarantee a new job would be found in weeks or even months, and this group doesn't have the financial luxury to gamble on when their next paycheck may be.

In theory, they could conduct a job search while still performing at their current job, but juggling those two responsibilities is much easier said than done. It's exhausting and prevents quality effort on either front.

Being entirely dependent on paychecks from a job you want to move on from is an extremely tough predicament and can stagnate career development.

If the income stopped, 29% could not cover expenses past four weeks

All employed respondents (not just the ones living paycheck-to-paycheck), were asked the following question: In your best estimation, how many weeks could you cover all expenses (rent, internet, insurance, utilities, etc.) if you stopped earning an income for an unknown amount of time? (you could use personal savings, credit card debt, other debt, etc.)

It's important to note respondents included debt products when providing these projected timeframes. The answers are not just considering personal savings.

Yet still, the plurality of employed consumers (29%) could only make it one to four weeks on personal savings and debt if they suddenly stopped earning an income. Another 16% would only last for five to eight weeks.

It only further highlights that so many Americans are living on razor thin margins and are too reliant on their paychecks to stay afloat.

Financial ruin seems to always be lurking around the corner for a lot of consumers, ready to pounce at the first site of trouble.

Disability insurance could be a safety net, but so few consider it

45% of respondents indicated they currently had a disability insurance policy either through their employer or a personal plan. 55% were not covered through disability insurance.

According to 2018 statistics from the Bureau of Labor Statistics, 42% of private employees had access to short term disability insurance through their employer, while 26% of government employees had the same. Those percentages were 34% and 38% respectively for long term disability insurance.

A type of insurance coverage, disability insurance replaces a portion of a policyholder's income should he or she suffer from an injury or illness that prevents them from working and earning an income.

In most cases, between 60 and 80% of one's income can be replaced via disability insurance. As a rule of thumb, the cost of disability insurance is typically between one and four percent of a policyholder's annual income.

Short term disability insurance replaces income for temporary illnesses or injuries, like a broken hand. Benefits usually last between three and six months.

On the other hand, long term disability insurance is intended for more serious injuries and illnesses that will keep you out of work for three months or longer. Benefits on this product can be 2, 5, or 10 years.

If the data from this report is any indication, a lot of consumers could benefit by at least looking into disability insurance. So many are living paycheck-to-paycheck and if those paychecks suddenly stopped due to injury or illness, it wouldn't be long until financial devastation.

But if they were covered by disability insurance, then at the very least some of their income would continue to come in and help them pay for everyday expenses and bills. It could make all the difference between getting by or not.

The only problem is that not enough consumers are considering disability insurance as an option...or even know what it is.

For the 55% of respondents that had no disability insurance policy, only 33% have ever considered it, while 67% have never even given it a thought.

And for that 67% that have never considered disability insurance, 46% admitted they didn't even know what disability insurance was, while 54% did.

If you're a consumer with limited personal savings, learning more about disability insurance could go a long way towards securing your finances.

Check to see if your employer offers a group disability insurance plan as some will offer it as an employee benefit where they pick up a large chunk of the cost.

Or if you're ready to take the next steps and see what it would cost you to have disability insurance, get a quote at Breeze:

Curious what disability insurance costs? Check your rate here
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Methodology

All data found within this report derives from a survey created and commissioned by Breeze and conducted online by survey platform Pollfish. In total, 1,500 adult Americans were surveyed. The appropriate respondents were found via Pollfish’s age filtering feature. This survey was conducted on November 9th, 2021. All respondents were asked to answer all questions truthfully and to the best of their abilities.

Survey results

Notes: Some answers won't add up to exactly 100% due to rounding.

If you'd like to see the raw data or data broken down by state, gender, race, age, etc., please email me at [email protected]

1. Do you have enough personal savings to cover an emergency $250 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 76% answered "yes"
  • 24% answered "no"

2. Do you have enough personal savings to cover an emergency $500 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 65% answered "yes"
  • 35% answered "no"

3. Do you have enough personal savings to cover an emergency $1,000 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 53% answered "yes"
  • 47% answered "no"

4. Do you have enough personal savings to cover an emergency $1,500 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 46% answered "yes"
  • 54% answered "no"

5. Do you have enough personal savings to cover an emergency $2,000 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 42% answered "yes"
  • 58% answered "no"

6. Do you have enough personal savings to cover an emergency $3,000 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 38% answered "yes"
  • 62% answered "no"

7. Do you have enough personal savings to cover an emergency $5,000 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 33% answered "yes"
  • 67% answered "no"

8. Do you have enough personal savings to cover an emergency $7,500 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 30% answered "yes"
  • 70% answered "no"

9. Do you have enough personal savings to cover an emergency $10,000 expense? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 27% answered "yes"
  • 73% answered "no"

10. Do you have enough personal savings to cover an emergency expense over $10,000? (i.e. without having to use a credit card, personal loan, other debt product, etc.)

  • 25% answered "yes"
  • 75% answered "no"

11. (Asked only to those who answered "no" for questions 1-6) Are you reducing your budget for the upcoming holiday season due to limited personal savings? (i.e. gift shopping)

  • 61% answered "yes"
  • 25% answered "no"
  • 14% answered "Not sure/I'd rather not say."

12. (Asked only to those who answered "no" for questions 1-6) In your best estimation, what percentage of your holiday seasons expenses will be financed via debt (i.e. credit card debt, personal loan debt, etc.) (Percent please)

  • The average respondent will finance 38% of their holiday expense with debt.

13. (Employed respondents who answered "no" for questions 1-6) If you had more in personal savings and weren’t living paycheck to paycheck, would you leave your current job and explore other career opportunities? (i.e. you don’t have the savings to keep paying bills after leaving one job without having another one already lined up)

  • 53% answered "yes"
  • 34% answered "no"
  • 13% answered "Not sure/I'd rather not say."

14. (Employed respondents) In your best estimation, how many weeks could you cover all expenses (rent, internet, insurance, utilities, etc.) if you stopped earning an income for an unknown amount of time? (you could use personal savings, credit card debt, other debt, etc.)

  • 29% answered between 1 to 4 weeks
  • 16% answered between 5 to 8 weeks
  • 9% answered between 9 to 12 weeks
  • 10% answered between 13 to 24 weeks
  • 17% answered between 25 to 52 weeks
  • 19% answered 53 weeks or more

15. Do you currently have a disability insurance policy (personal or employer plan)?

  • 45% answered "yes"
  • 55% answered "no"

16. (Asked only to those who answered "no" to Q15) Have you ever considered a disability insurance policy?

  • 33% answered "yes"
  • 67% answered "no"

17. (Asked only to those who answered "no" to Q15/16) Do you know what disability insurance is?

  • 54% answered "yes"
  • 46% answered "no"

18. Do you have more or less personal savings today (November 2021) than you did before the coronavirus pandemic started? (March 2020)

  • 44% answered "more"
  • 25% answered "less"
  • 26% answered "about the same"
  • 6% answered "Not sure/I'd rather not say."

19. (Asked only to those who answered "more" to Q18) Why do you have more in savings today than you did before the coronavirus pandemic started? (March 2020) (Select all that apply)

  • 70% answered "I spent a lot less on social outings during the pandemic (concerts, restaurants, sporting events, etc.)."
  • 40% answered "I was more focused day-to-day on the stock market and my investments."
  • 42% answered "I took on a side-hustle and/or freelance work because I was working from home and had more flexibility."
  • 30% answered "I landed a new job with a higher salary."
  • 33% answered "I stopped making student loan and/or other debt payments due to pandemic forbearance."
  • 5% answered "other"

20. (Asked only to those who answered "less" to Q18) Why do you have less in savings today than you did before the coronavirus pandemic started? (March 2020) (Select all that apply)

  • 34% answered "I lost my job during the pandemic and had to dig into savings."
  • 16% answered "I was more focused day-to-day on the stock market and my investments and lost money."
  • 25% answered "I took a pay cut at my job due to the pandemic and/or remote work."
  • 26% answered "other"
Research
Published November 16, 2021