Consumer Finance Survey Results
Many U.S. adults lack emergency savings but few turn to nonprofits
- 34 percent of adult Americans have no emergency savings in place.
- The most vulnerable are those with lower incomes, people of color, individuals with less education and young adults.
- 75 percent of adults don’t know that quality financial advice at low or no cost is available in many communities.
What's the problem?
On March 31, 2015, NeighborWorks America released highlights from its second annual consumer finance survey. Chief among the findings is the alarming fact that approximately 34 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. Another 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, with the highest percentages of households without any savings at all seen among African-Americans, adults with lower incomes, and among those with a high school education or less. The details are the following:
- Families earning less than $40,000 a year (50 percent)—compared to those earning $40,000-$59,000 (34 percent), households making $60,000-$100,000 (21 percent) and families with incomes of $100,000 or more (17 percent).
- African-Americans (47 percent) and Hispanics (42 percent)—compared to 29 percent of Caucasians.
- Households led by individuals with education of high school or less (49 percent)—compared to those with some college education (30 percent) and or college graduates (18 percent).
- Individuals or families led by people under 30 years old (39 percent)—compared to those under 55 (36 percent) or 55 and older (27 percent).
However, it’s clear that a larger number of Americans from all strata of society are having a difficult time preparing for unanticipated events or to achieve their goals.
Why is this a crisis?
The economy is in recovery, with unemployment the lowest it’s been in several years. But while the cost of gasoline – a major expense for everyone – has declined from a year ago, other costs, particularly housing, are increasing. That is making it difficult for many adults build emergency savings. Overall, the economic picture is improving, but the hole that many families found themselves from the Great Recession will take more time to dig out.
What is the solution?
It is critical for all adults—especially 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.
NeighborWorks America is committed to helping Americans achieve this goal by training nonprofit professionals to offer services in their communities that build “financial capability.” 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.
Unfortunately, our survey found 75 percent of adults don’t know that quality financial information and advice is available in most communities at low or no cost. However, the survey found a sharp increase in the number of adults who would be willing to work with nonprofits to help build financial capability. Fifty-nine percent of adults are interested in working a nonprofit to set goals and achieve them, up from 37 percent in 2014.
The best way to find a reputable and reliable source of financial education, counseling and coaching is to contact the closest NeighborWorks organization.
This blended telephone and web-based email survey was conducted of a nationally representative sample of 1,035 U.S. adults. It has a margin of error of +/- 3.1 percentage points. Conducted by SMARI.LLC for NeighborWorks America, March 10-19, 2015.