By Chhavi Agarwal | Wealth of Geeks
According to the latest Bankrate survey, nearly six in 10 adults in the United States are uncomfortable with their emergency savings, a slight increase from 57 percent in 2023. This follows the same trend — 37 percent in 2018, 44 percent in 2020, 48 percent in 2021, and 58 percent in 2022.
Building emergency savings has been a challenge for many Americans. Since the COVID-19 pandemic, high inflation and rising interest rates only intensified this struggle, leaving people feeling increasingly insecure about their financial safety nets.
“Emergency savings have long been the Achilles heel of Americans’ personal finances. More households have no emergency savings, and millions of families are far short of the savings they would need to feel comfortable,” says Greg McBride, Chief Financial Analyst for Bankrate.
What the Survey Reveals
The survey reveals that 27% of adults in America have no emergency savings. Along generational lines, one in three millennials (34%) have no emergency savings, the highest percentage. Generation X follows (31%), with Generation Z right behind (29%).
Three in ten consumers report that, while they have some savings, they could not cover three months of expenses. People who identify as Gen Z are most affected; nearly half (44%) have insufficient savings.
36% of adults prioritize paying down debt and increasing emergency savings in 2024. That’s up slightly from 34% in 2023, and the highest percentage in seven years.
“Recognizing that the cost of carrying debt has increased significantly in the past two years and the insufficient level of emergency savings, more Americans are focusing on both paying down debt and boosting emergency savings simultaneously, rather than one to the exclusion of the other,” McBride says.
Five Quick Ways To Boost Emergency Savings
In today’s uncertain economic climate, having a robust emergency savings fund is more crucial than ever. Use these five effective strategies to boost emergency savings and secure finances.
Automate Your Savings
Automatically transferring a set amount from your checking account to your savings account ensures consistent savings without relying on willpower. Consumers can set up customized automatic transfers from their checking account to their savings account every payday.
“Having a direct deposit from your paycheck into a dedicated savings account automates the savings, allowing you to channel your take-home pay toward the goal of paying down debt,” McBride adds.
Cut Non-Essential Expenses
Cutting back on discretionary spending can boost savings significantly. Americans with a daily habit of stopping at the barista station for a $5 daily coffee can switch to homemade coffee. That one change saves about $150 per month. It’s a simple yet effective way to add to an emergency fund.
Increase Your Income
Market Watch reports that more than half of Americans (54%) have adopted a side hustle to supplement their income in the last 12 months. A Lending Tree survey found 52% of Americans need a side hustle just to cover basic costs.
For some, temporary gigs and side hustles can create valuable secondary income streams to help bolster emergency savings. Consider taking on a freelance project or a part-time job that brings in an extra $200 a month. Direct as much of these additional earnings as you can into a savings account to build a financial cushion.
Sell Unused Items
Turn unused or forgotten items into quick cash. By selling old electronics, clothes, or furniture on platforms like eBay, Craigslist, Facebook Marketplace, or local consignment shops, frugal consumers can earn $300 or more, swiftly boosting emergency funds.
Create a Budget and Stick To It
Creating a budget is essential for tracking expenses and uncovering potential savings. By carefully reviewing personal spending habits, shoppers might discover that trimming entertainment subscriptions and dining out less could save an extra $100 monthly, allowing them to grow their emergency fund.
Consumers’ Next Steps
A growing number of Americans now prioritize both debt repayment and increasing their emergency savings, recognizing the dual importance of financial stability and reduced debt burden. By taking proactive steps today, consumers can build a more secure financial future and mitigate the impact of economic uncertainties.
This article was produced by Media Decision and syndicated by Wealth of Geeks.
