Whether it's a broken refrigerator, car trouble or medical issues, unexpected costs are a part of life. But such routine curveballs too often lead to serious financial distress for many Americans.
That's according to a new report from Bankrate, which surveyed more than 1,000 American adults about their ability to handle a surprise bill. Despite the current situation of the country low unemployment rateThe annual study found that 59% of Americans do not have enough savings to cover an unexpected $1,000 emergency expense in 2025.
“We are fundamentally a paycheck-to-paycheck country,” Mark Hamrick, senior economic analyst at Bankrate, said in a statement. “Despite low unemployment and steady growth, fewer Americans have the equivalent of a financial safety net to cover inevitable unexpected expenses. This is one of the consequences of increased prices stemming from inflation, the effects of which are still being felt.” Are.”
Inflation and growth a key issue in the 2024 presidential election price of everyday goods The impact on Americans continues. Grocery inflation reached record high during peak of coronavirus pandemic Peak of 13.5% in 2022While the overall rate of inflation for all products and services reached 9.1%.
Although inflation has subsided Annual rate of 2.9% As of December, prices for food, shelter and many other goods remain high. Consumers have also found that many common products, from snacks to paper towels, have become smaller, a retail sales strategy Known as “contraction inflation” Its purpose is to cut costs for the manufacturer.
In his January 20 inaugural address, President Trump said he would direct his Cabinet to “put vast powers at his disposal to defeat record inflation and rapidly reduce costs and prices.”
Can the Trump administration achieve such a feat? remains to be seenWhile polls show that many Americans are skeptical that prices will come back down to earth. Economists also warn that Mr Trump's policies, which could include new tariffs on US imports and deporting millions of undocumented immigrants, may prove inflationary,
Young Americans are most concerned
Certainly, steep increases in the cost of food, housing, and health care over the past several years have made it difficult for many families to make ends meet, let alone save money. The Bankrate survey shows that 73% of Americans said they are saving less for unexpected expenses, compared to 68% in 2024.
According to the Bankrate report, “Although inflation is no longer rising as rapidly as it did in recent years, more people this year feel the economy has hurt their savings.”
Young Americans are most concerned about their savings. 80% of Gen Zers are worried about whether they will be able to cover immediate expenses if their primary source of income is suddenly lost, compared to 72% for Millennials and Gen Zers. About 58% of Baby Boomers say they regularly worry about saving enough money, a particular concern because many people already retired,
debtor nation
Only 41% of Americans said they would be able to use their savings to cover an unexpected $1,000 expense, Bankrate reports. This is down 3% from 2024 and the lowest percentage since 2021 (39%)
Another 25% said they would use a credit card to pay a $1,000 bill, 13% said they would contact a family member for the money and 5% said they would take a personal loan. Overall, about 43% of respondents told Bankrate they would have to borrow money to pay for a $1,000 emergency expense.
That's a concern because consumers collectively owe a record $1.14 trillion in credit card debt, data from the Federal Reserve Bank of New York shows. showMeanwhile, credit card rates keep climbingHovering around 24%.
“The cost of living continues to rise, leading more and more individuals and families to turn to credit cards in times of crisis,” Hamrick said. “When used wisely and effectively they are a fantastic tool. But with interest rates still high, we need to avoid increasing debt burdens, which can make saving more challenging. “
On a positive note, another 13% of Americans said they would pay off a surprising $1,000 in debt by curbing their spending, while 36% of adults said their credit card debt exceeds their emergency savings, more than half, Bankrate reported. More The survey found that 55% of respondents had more emergency savings than credit card debt in 2024. This is the highest percentage since 2018.
When asked how much emergency savings they had, 28% of respondents said they had enough to cover six months of expenses; 16% said they had enough stuff to last them three to five months; 29% had enough money to cover less than three months of bills; And 27% said they had no emergency savings.
Tips for Saving Now
For those who consider themselves among the roughly one-third of Americans who want to reduce their debt and increase their emergency savings in 2025, Bankrate offers three tips:
- Calculate how much you need to save. As a general goal, experts recommend saving three to six months of expenses in case of an emergency. To figure out how much to spend, add up the total amount you spend each month on food, housing, gas and other bills. So if your monthly bills amount to $2,000 per month, you will need $6,000 in savings to get by in case of an emergency like job loss.
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Open a savings account only for emergencies. Opening an online savings account, money market account, money market mutual fund or a separate savings account with your existing bank or credit union can help you save for unexpected emergencies.
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Make a budget – and stick to it. Install guardrails around your spending habits by creating a budget that allows you to start saving or accumulating more money. Keep it as a reminder to help develop good habits. If you're new to saving, Bankrate chief financial analyst Greg McBride recommends setting up an automatic transfer of money from your checking account to a dedicated savings account to help you get started.
“Automating savings is the key to doing this,” McBride said in the report.