Consumer Finance Survey Results
More adults are saving for an emergency, but most don’t use a budget as their financial roadmap
- 28 percent of adult Americans have no emergency savings in place.
- The most vulnerable are those with lower incomes, people of color, and relatively speaking, women and young adults.
- 61 percent of adults do not follow a follow a formal budget plan
What's the problem?
On March 28, 2016, NeighborWorks America released highlights from its third annual consumer finance survey. Chief among the findings is the alarming fact that approximately 29 percent of adult Americans have no emergency savings in place—whether that’s to pay for the repair of a car that’s required to get to work, or to fix a major household necessity such as a roof or furnace.
While an improvement from one year ago, the data show that millions of Americans are at financial risk. Moreover, 25 percent of adults have only enough money saved to get by for less than one month if they were to suddenly lose their jobs or face some other financial emergency.
Who’s most at risk?
There is a large disparity in the ability to save for a financial emergency by race and income. As income increased, so did the percentage of respondents who had money saved in case of an emergency. Ninety-one percent of those with incomes of $100,000 reported holding emergency savings, compared to just 30 percent of adults with income below $20,000, 63 percent of those with income below $40,000, and 78 percent of those with incomes between $40,000 -$50,000.
There were significant differences by race. More whites (78%) reported having an emergency savings account than African Americans (50%), Hispanics (62%), or Asians (74%)., with the highest percentages of households without any emergency savings at all reported by African-Americans, adults with lower incomes, and among those with a high school education or less.
Why does this demand our attention?
The economy is in recovery, with unemployment the lowest it’s been in nearly a decade. But while broad inflation is not a major concern, the cost of housing – which takes a large share of many families’ budgets -- is increasing at a rate much faster than wages, especially for those at the lower income levels. That is making it difficult for many adults build emergency savings, and is all the more reason for people to develop a budget, monitor and adjust it as needed over the long run to help ensure financial stability.
What is the solution?
It is critical for all adults—renters and homeowners—to have a sound budget and financial plan that includes a strategy for building an appropriate “nest egg” that could tide them over for at least three months if necessary, and that acts as foundation for the future.
NeighborWorks America is committed to helping Americans achieve this goal by training nonprofit professionals to offer services in their communities that build “financial capability.” In the last two years, NeighborWorks America has helped members of the NeighborWorks network provide group financial capability coaching to more than 27,000 adults. Helping individuals and families establish and sustain an emergency savings account is just one component of financial capability programming, which includes both group education classes and one-on-one coaching.
The telephone survey was conducted of a nationally representative sample of 1,000 U.S. adults. The survey has a total cumulative sampling error of +/- 3.1% at the 95% confidence level. Conducted by Finn Partners, March 10-14, 2016.