Why Half of Americans Can't Come Up With $400 in an Emergency
As recently as 2016, the Federal Reserve surveyed more than 5,000 Americans about their financial situation. Among the findings was one startling statistic: Approximately 46 percent of Americans stated they do not have enough money to cover a $400 emergency expense. For most of us, it's not difficult to imagine a scenario where an expense like this could arise. Car repairs, a medical bill, and even a basic home repair, can easily reach $400. How did so many Americans get here? More importantly, how can we improve?
This figure doesn't represent a sudden upheaval in American lives. In fact, the figure represents an improvement in people's finances relative to previous studies from the Federal Reserve. A long list of other studies supports this finding. Author Neal Gabler reported on the work of one economist, who concluded that in the event of a job loss, "a family in the middle quintile, with an average income of roughly $50,000, could continue its spending for ... six days." This finding is scary, and it isn't much better at the next income level. "Even in the second-highest quintile, a family could maintain its normal consumption for only 5.3 months," Gabler continues.
Source: Fool.com