WASHINGTON — Report after report drives home the worrisome fact that lots of Americans don’t have enough saved to cover an emergency expense, and the many who don’t are apparently not too concerned about it.
A Bankrate survey says one in four Americans have no emergency savings, and only 18 percent have enough to cover three to five months’ of expenses. Another 22 percent have savings that would cover less than three months’ worth of expenses.
The recommended amount of money put away for emergency expenses is six months, but just 29 percent of Americans have that much tucked away.
And there is a lot of denial when it comes to emergency savings.
“Eighteen percent of those that have absolutely no emergency savings say they are OK with that,” Bankrate’s Greg McBride told WTOP.
“They are either whistling past the financial graveyard and thinking that nothing bad is ever going to happen, or they’ve got that rich uncle or ‘Bank of Mom and Dad’ that always manages to bail them out,” he said.
Just as surprising, incomes don’t seem to have as much to do with emergency savings as you might think.
“There are high income households that are still in a position where they don’t have emergency savings. But we see plenty of incidences of lower-income households that have managed to squirrel away money, and it’s not because they’ve got a lot of breathing room in the budget. It’s because of the discipline of paying yourself first and living on less than you make,” McBride said.
Case in point, one in four of the highest income households have either no emergency savings or only enough to cover less than three months’ worth of expenses, but 27 percent of the lowest-income households have managed to accumulate enough savings to cover at least three months of expenses.
The survey found 30 percent of younger baby boomers have no emergency savings, more than any other generation.
Bankrate’s phone survey was conducted June 6 through June 10 and included more than 1,000 household respondents.
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