WASHINGTON (1/25/16)--A new brief from Pew Charitable Trusts, the third in a series, explores the role of emergency savings in family financial security--providing insight for credit unions that seek to improve the financial lives of members.
In the year before the Pew survey, 60% of participating families experienced a financial shock. For most of these households, the most expensive shocks were destabilizing and made it hard to make ends meet. Even among households that do not have a single big, disruptive shock, smaller expenses can strain budgets and create hardship. Seventy-one percent of respondents said that unexpected expenses made it hard for them to save in some months.
Families have little savings to fall back on in the event of an emergency. Perceptions of financial security often differ depending on whether it is early or later in the month.
Many households use their savings accounts as transaction accounts, similar to checking. Similarly, recommended financial practices such as making a budget are not associated with increased levels of financial security.
The report recommends policymakers should consider four key implications as they seek to tackle American families’ short-term savings needs: