Talk of how one should have ample emergency savings is good but, for many Americans, there is just very little to tap into.
More than one in three have less now than they did before the pandemic, while 10% have no savings at all. Only 24% said that they have more while 34% are at in the same financial place, the latest study from financial services company Bankrate has found.
For families earning below $50,000, that number of people without any savings goes up to 37%.
The number of people without any savings is currently the highest in 12 years of polling.
Savings Are Getting Sparser While Money Worries Are Going Up
The study, which looked at 1,025 adults in different parts of the country, found that dwindling savings are a significant source of stress even for those who have them.
While 48% of Americans were unhappy with the amount of savings they had in 2021, that number is now at 58%. 29% are somewhat comfortable while just 13% are very comfortable.
Financial comfort is directly correlated with having some money in the bank for a rainy day. Out of those who said they were either somewhat or very comfortable, 82% had at least three months of expenses saved in the bank.
"The percentage of Americans who are comfortable with their emergency savings has gone from 54% to 42% in the past two years, while those uncomfortable has jumped from 44% to a majority 58%," Bankrate's Chief Financial Analyst Greg McBride said in a statement. "Inflation at the highest levels in 40 years will erode the comfort level with, and buying power of, your emergency savings."
Age is predictably correlated with savings -- hardly a surprise since more time spent working means that one has had more time to save. 40% of millennials had enough saved to cover three months of expenses while that number was at a respective 47% for Generation X and 62% for baby boomers.
"Even with fewer households having no emergency savings and 56% having the same or more savings than one year ago, the majority of Americans are uncomfortable with the emergency savings they have in 2022, a change from the previous two years," McBride said.
Low Income Can Be A Vicious Cycle
While a survey cannot get into the causation of such numbers, it stands to reason that inflation is eating away at many whose lower income makes it difficult or impossible to save.
The consumer index rose by 8.6% in May, a high unseen in nearly 40 years. Everything from gas and grocery items to the electric bill are getting more expensive and, for those who were already below average incomes, dollars that could be put toward a rainy day fund are instead spent to make up for higher costs.
A recent study found that 63% of American households have recently cut back on consumer spending while 57% did so on groceries and 44% on gas. Even more alarmingly, 35% have made fewer debt payments -- a situation that can create a financial hole and put one even farther from eventually being able to save.
"Households with higher annual incomes reported higher levels of comfort with their level of savings," the study reads. "Of those that earned more than $100,000, more than half (59%) were comfortable with their savings, while less than half (46%) of those earning $50,000 to $99,999 reported being comfortable with their emergency funds."