If you suddenly faced an emergency that cost you at least $500 would you have enough funds in your bank account (or under your mattress) to pay for that unforeseen expense? Well, more than half of the country wouldn’t be able to afford it.
According to a new study by Bankrate.com, more than half (59 percent) of Americans do not have a minimum of $500 in their savings account as part of their rainy day fund.
The website discovered that just 41 percent of Americans would have enough funds in their account to pay for a $500 or $1,000 emergency. Meanwhile, one-fifth of survey participants said they would have to use a credit card to pay for the matter, and another one-fifth noted they would cut spending. Eleven percent of respondents admitted to borrowing money from friends and family.
Despite the constant complaints that society has about millennials, it seems they’re more prepared than their older counterparts. The report discovered that half of millennials – those between 18 and 29 years of age – said they had $500 or more in savings. Moreover, more than two-thirds (69 percent) of millennials concede to wanting to use savings or cut back on spending rather than using a credit card.
On the other hand, seniors over 71 were more likely to use their credit cards to pay for the matter.
“I wish I could say it’s because people are smarter about it, but it’s really the fear factor. One little thing — a new roof, a medical emergency — can set you up for financial disaster if you don’t have an emergency fund,” said Carina Diamond, a certified financial planner professional in Akron, Ohio, and board ambassador for the CFP Board, in a statement.
“It is a much better alternative. There is nothing as quick and free of negative consequences.”
Life happens so get ready for it!
Here is an infographic from the website:
Most seniors are on a fixed income, with limited funds for savings. So it is easy to service a $500 credit card debt. That is not a bad thing as long as the monthly payments fit into your budget. I am 60 and have never had an emergency fund, or savings account with more than a few hundred dollars in it, unless I was saving to purchase a car. . I live very well on $1,641 per month, pension. It is called living within a budget, credit card payments included. I have not had a car payment since 1986. In 2018 at 62 I will start getting my SS benefit and will then have more monthly income than I ever had during my working years.
Most dont even consider the possibility of an “emergency” in the first place, today is all I need.
Being prepared is a concept that does not appeal if it is not happening this minute, but then, it is always too late.
Another problem is a debt mentallity, borrowing from what ever source to cover a sudden emergency.
But as always:The borrower is a Slave to the Lender.
And for further consideration:
An Empty Stomach makes for a Willing Slave.
I am 60 and never had an empty stomach and do not consider myself a slave. Credit is a tool I use to have a better life. I see no problem in using credit, as long as you know what the monthly interest charge really is and are willing to pay much more than the minimum payments. I have 17 credit card accounts, most with zero balance or less than $500. I have 6 accounts with zero interest for 12 to 18 months. I will have all my accounts paid off in August 2018. Credit card accounts are for short term debt, for me many times less than 3 to 6 months or less. For me credit cards allow me to vacation and visit family 6 to 8 months each year, so the small interest charge I pay each month is worth it.