While the number of consumers who can afford to pay a $1,000 emergency expense has remained largely unchanged for the past three years, the percentage of consumers who are putting less away for a rainy day is on the rise, largely due to inflation, according to data released this week by Bankrate.
Fifty-six percent of consumers are not able to cover a $1,000 emergency, which is down from 57% a year ago, but more than one-third of those consumers said they would have to borrow the money — either from a credit card or from a friend or family member if they needed it right away.
Nearly 70% of consumers said they are saving less because of inflation, rising interest rates, or a change in their employment status.
Two-thirds of consumers would last less than a month on their savings if they suffered a sudden loss of income or a job, indicating how many people are living paycheck-to-paycheck and just barely getting by.
Perhaps not surprising to anyone is that the older the consumer was, the more likely they were to say that they could weather an emergency expense of $1,000. Fifty-nine percent of Baby Boomers (ages 60-78) said they could handle a $1,000 expense, followed by 43% of Millennials (ages 28-43), 36% of Gen Xers (ages 44-59) and 31% of Generation Z (ages 18-27).
“All too many Americans continue to walk on thin ice, financially speaking, with fewer than half indicating they would pay an emergency expense of $1,000 or more from savings,”said Bankrate Senior Economic Analyst Mark Hamrick.“Inflation has been a key culprit standing in the way of further progress on the savings front. Fortunately, rising interest rates have also provided more generous returns on savings.”
