Majority of Americans Don’t Have Money Set Aside for Emergencies
A fully funded emergency fund is the first step to financial stability. It is a good idea, but many people don’t have the money to establish an emergency fund.
A new poll from the National Foundation for Credit Counseling showed that a majority of Americans would not use an emergency fund to pay for unplanned expenses.
Only 36 percent of respondents would take money from a savings account if they needed $1,000 for an unplanned expense. The other 64 percent of respondents would have to turn to other sources. Unfortunately, the other sources aren’t good options and can lead to deeper financial problems.
* 17 percent would borrow from friends or family.
* 17 percent would disregard other monthly expenses
* 12 percent would sell or pawn assets
* 9 percent would take out a loan
* 9 percent would get a cash advance on a credit card.
“Unfortunately, it is not uncommon to be hit with $1,000 in unplanned expenses,” says Bill Hardekopf, CEO of LowCards.com. “It can be medical bills, appliances that break down, home or automobile repairs. It can happen at any time. If you don’t have the money set aside to cover these emergencies, the costs can snowball and put you even further behind. As hard as it is to put money into an emergency fund, you will be much better off when that emergency hits.”