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How much money do you have in your savings account? It’s not a trick question, but if you are like most Americans that answer is less than $500.
A new study by Bankrate found a staggering 6 out of 10 Americans have a savings as little as $500. As a result, most are not prepared to handle a financial emergency. “The report further states only 41 percent of American adults studied would be able to pay off an unexpected expense at a moment’s notice. A little over 20 percent of Americans would be able to use a credit card to fund an unexpected expense and pay it off later. Another 20 percent of Americans admitted they would have to cut into their existing budgets. The remaining 11 percent said they’d need to lean on family members and close friends for financial help,” reported<a href="http://elitedaily.com/news/americans-have-less-than-500-in-savings-accounts/1752155/" target="_blank"> Elite Daily</a>.
This puts many of us in a precarious situation. "Five-hundred dollars is enough money that it could be catastrophic if you’re really living on the edge and don’t have enough money," Bankrate senior investing analyst Sheyna Steiner told <a href="http://www.forbes.com/sites/maggiemcgrath/2016/01/06/63-of-americans-dont-have-enough-savings-to-cover-a-500-emergency/#4460422d6dde" target="_blank"><em>Forbes</em></a> in regard to the same study. In fact, that 63% who is living on the edge said they would either cut back on spending in other areas (23%), charge a credit card (15%) or borrow money from friends and family (15%) to pay for an unexpected event.
“It was striking that so few people would just immediately put it on their credit card,” Steiner told Forbes. “But if you’ve got a little wiggle room, maybe [a $500 unplanned expense] is just low enough that you could maybe lower your spending.” That shows Americans want to be financially responsible, it's just that most of us are living with limitations that prohibit us from always making the best financial choices.
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