Fewer than 4 in 10 Americans have the cash to handle an emergency because they don’t include a separate fund to handle the unexpected in their budgeting.
Bankrate‘s Money Pulse poll targeted the topic of family budgeting in a survey done Dec. 18-21. Just 18 percent of Americans who responded to the survey said they don’t keep a budget.
That’s the good news. “I’m excited that more people are embracing that concept (of budgeting) than in previous years,” says Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling.
However, if someone is dealt a significant, unexpected expense outside his or her budget, like an $1,000 emergency room visit or a $500 car repair, only 38 percent of respondents said they could cover it with cash they have on hand in a savings account or checking account. (See chart below.)
“Oftentimes, people have felt that a budget was restrictive and they resisted creating a workable budget when in reality, a budget is just a tool that helps you spend your hard-earned money as you choose to,” Cunningham says. “Without a budget, we spend money very casually and often in ways we never intended.”
Here are some other highlight’s from Bankrate’s survey:
>>> 52% of college graduates say they would dip into savings, compared with just 31% with a high school education or less.
>>> Only 7% of millennials between the ages of 18 and 29 say they would use a credit card for unexpected expenses, versus 13% of all other age groups.
>>> 21% of parents say they would borrow from family and friends, while 14% of respondents without children would do that.