WASHINGTON (1/8/15)--The large majority of Americans maintain some type of household budget, but that doesn't necessarily insulate them from financial disaster, a survey by Bankrate.com has found.
Roughly 62% of U.S. consumers are without emergency savings for those situations that require a sudden influx of cash; expenses such as an emergency room visit or perhaps unavoidable vehicle repairs.
That means, despite that careful monthly financial planning, many Americans are just one bad break away from big financial problems.
"Emergency savings are not just critical for weathering an emergency, they're also important for successful homeownership and retirement savings," Signe-Mary McKernan, Urban Institute senior fellow and economist, told MarketWatch (Jan. 7).
Further, of the 1,000 adults surveyed by Bankrate.com, only 39% said they have a "rainy day" fund sufficient to cover three months of expenses. And only 48% said they would be able to cover a $400 unexpected expense without selling something or borrowing money.
Lingering debt from the financial crisis may be driving that trend, according to Andrew Meadows, producer of the retirement documentary "Broken Eggs."
"Probably the most common types of debt are student loans and costs related to medical issues," he told MarketWatch. "People are still feeling the heat from the Great Recession" as well.
The fact that so many Americans can't cover unforeseen costs likely means that, despite their healthy budgeting habits, they're simply not saving enough money.
"A solid majority of Americans say they have a household budget, which is a good thing," said Claes Bell, analyst for Bankrate.com. "But too few have the ability to cover expenses outside their budget without going into debt or turning to family and friends for help."
If hit with an unplanned expense, respondents said they would raise the money by reducing overall spending (26%), borrowing from family or friends (16%), or using credit cards (16%).
Bankrate found that 82% of Americans keep a household budget, a 22% increase from 2012. And the majority of budgeters keep track of their finances with pen and paper (36%) or in their heads (18%).
Only 26% said they use a smartphone app or computer program to stay on top of their budgets.