As if being laid off weren’t stressful enough, most Americans don’t have enough money saved to pay monthly bills if they’re jobless for more than a few weeks. But you can avoid that added stress: Create an emergency fund now for potential unemployment. A recent NerdWallet study found that Americans don’t save enough to weather several common emergencies, the most expensive being unemployment.
Are American families becoming more financially resilient? Hardly. A new report from Pew Charitable Trusts found what many economists already know: many American families struggle to make ends meet when facing a financial shock.
“It does not come as a surprise,” George Washington University economist Annamaria Lusardi said of the study, released earlier this month.
Last year, the Federal Reserve reported that 46 percent of Americans would not be able to cover a $400 emergency expense or that they’d have to sell something or borrow money to do so. The Fed’s report in 2015 found that 47 percent would have a hard time coming up with such an amount.
A lot has been written about America’s retirement crisis (some of it by Next Avenue). But I don’t think there’s been enough attention given to America’s emergency fund crisis. And I think it’s about time employers step up to help with this problem by offering the equivalent of an emergency fund 401(k), maybe with some assistance from President Trump. The numbers are painfully urgent: Nearly half of U.S. households lack a basic personal safety net to prepare for emergencies and 140 million Americans have little or no savings at all, according to a recent CFED study. In a Federal Reserve survey, 46% of Americans said they’d have difficulty with an emergency expense of $400.