How Many Americans Could Cover an Unplanned $1,000 Expense?

A new survey finds that just 44% of Americans could cover an unplanned $1,000 expense such as a car repair or emergency room bill. 

Survey sponsor Bankrate notes that this level is the highest in eight years of its polling and tops the 39%–41% range that had prevailed from 2017 to 2021.  

“While the ability to cover an unplanned $1,000 expense from savings is the best we’ve seen over the past eight years, the majority of Americans still cannot afford to do so,” says Greg McBride, Chief Financial Analyst for Bankrate. “The reliance on borrowing is still high, with more than one-third of households having to turn to a credit card, personal loan, or family and friends in the face of unplanned expenses.”

According to the findings: 

• 20% of respondents would finance the expense with a credit card and pay it off over time, up from 18% last year and the highest since 21% in 2017;
• 15% would reduce spending on other things, down from 18% last year but within the 13%-18% range that has prevailed since 2018;
• 10% would need to borrow from family or friends, down for the second year in a row and the lowest in the eight years of polling; and
• 4% would take a personal loan, which is only half of the 8% that pointed to this last year and the lowest since this option was added in 2018.

Overall, nearly 35% would need to borrow the money in some way—via a credit card, personal loan or from family or friends—if they incurred an unplanned $1,000 expense, Bankrate notes. 

Not surprisingly, the ability to pay an unplanned $1,000 expense from savings is correlated to educational attainment and income:  

• 59% of college graduate households able to use savings, compared with 40% of those with some college education and just 34% with no more than a high school diploma.
• 60% of households with annual earnings of $50,000 or more could cover an unplanned $1,000 expense from savings, including 53% of those earning $50,000–$74,999 and 62% of those earning $75,000 or more per year.
• Among households earning less than $50,000, only 26% say they are able to cover an unplanned $1,000 expense from savings, including 34% with annual earnings of $30,000–$49,999 and 22% earning less than $30,000.

By generation, the survey found that younger Millennials (age 26-32) were the most likely of all age groups to finance the expense with a credit card (27%), compared with 19% of Gen Z, Gen X and Baby Boomers. 

Inflation’s Impact

Meanwhile, nearly half (49%) of respondents say inflation is causing them to save less for unplanned expenses, while just 16% claim it is enabling them to save more and a third say it is having no impact on their ability to save. 

“A telling indicator of the impact inflation is having on household finances is that nearly half of Americans say inflation is holding back their ability to save for unplanned expenses while just one in six say it is enabling them to save more,” McBride observes. 

By generation, more than half of Millennials (54%) and Gen X (53%) say inflation is causing them to save less for unplanned expenses, compared to 36% of Gen Z. That sentiment also carries across income levels, as 46% of the highest earning households say that inflations is holding back their ability to save, along with 58% of those earning $30,000-$49,999. Only a minority of households claim they are able to save more, ranging from 14% of households earning $30,000–$49,999 to 17% for households with earnings of $75,000 or more per year.

The survey was conducted by SSRS on its Omnibus survey platform from Jan. 4–9, 2022, among a sample of 1,004 respondents.