Could You Come Up With $2,000 In An Emergency? Study Finds 40% of Americans Can’t!

April 11, 2014  |  

If the need ever arose, would you be able to come up with $2,000? If you said no, four out of 10 Americans are in the same boat! In the event of an emergency, a large chunk of Americans do not have the wherewithal to cover unexpected expenses, Consumer Affairs reports.

According to the National Financial Capability Study, conducted by the FINRA, 60 percent of Americans do not have a three-month savings reserve if they ever lost their jobs or became ill. When asked if they had “too much debt,” 20 percent of individuals in the U.S. admitted that they “strongly agreed” with the statement — 40 percent “somewhat agreed.”

“The grand majority of people who say they do not have emergency funds also say they have too much debt,” House of Debt added, “…35% of individuals both have too much debt and do not have three months of reserve funds in case of an emergency.”

Americans find it difficult to build a financial nest egg to cushion their monetary setbacks because of stagnating wages and the rising cost of living. Consumer Affairs offers a few useful tips to help Americans get out of their financial rut and start saving:

“Restaurant visits are nice, but if you’re neck-deep in debt, or lack so much as a $2,000 emergency fund, you’re better off eating at home and hanging on to that restaurant money…No gourmet dinner tastes as good as getting out of debt feels. Not even close. Similarly, smartphones are amazing wonderful gadgets, but always having the latest-gen model is a fast way to spend yourself into the poorhouse,” it said.

Consumer Affairs advises you to refrain from carrying a monthly credit card balance. You must pay your credit card bill in full by the end of the month or else the high interest charges will swallow you whole. If you’re already in too deep where your balance is too high, you must put the credit card away. Don’t make any additional purchases until it’s paid — “otherwise, every new charge you make will generate high interest fees,” it adds.

Also, use cash! The human mind just doesn’t seem to register credit cards as “real money.” It’s easier to splurge and spend lavishly when you’re simply swiping a card than when you’re fishing your pockets for cash.

“Putting $20 on a credit card is the same as spending a $20 bill — worse, in fact, because that $20 credit card purchase racks up interest fees if I don’t pay it off at once,” Consumer Affairs says.

This survey analyzed a representative sample of 25,000 Americans three years after the Great Recession.

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