Editors' pick: Originally published Feb. 17.
Most of you are working without a financial safety net, and it won't take much for you and your savings to fall.Roughly six in 10 Americans don't have enough savings to pay for a $500 car repair or a $1,000 emergency room bill, according to a new Bankrate survey. Don't blame younger generations for draining the rainy-day fund, either. It's their parents and grandparents who are the least prepared.
"It's not a matter of if, but when an unexpected expense will pop up," says Jill Cornfield, Bankrate analyst. "Our survey shows that just under half of adults surveyed said they or a family member had a major expense in the past 12 months."
While 41% who said they would use their savings when faced with an unexpected expense, 21% would finance the expense on a credit card. Another 20% would reduce spending on other things and 11% would borrow from family or friends.
The good news is that while savings generally increase with income and education. However, almost half of the highest-income households ($75,000+ per year) and college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit.
Of all age groups, though, the youngest Millennials are the most equipped to pay for an unexpected expense using their savings. After years of dealing with student debt and low to no pay, 47% of those aged 18 to 29 responded that they would use their savings to cover such a burden, up from 33% in 2014. The Silent Generation, roughly aged 72 to 91, is more likely to use a credit card than any other generation. Overall reliance on credit cards to finance an unexpected expense is up, continuing a three year trend dating back to 2014.