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You Have $2,000, But Lots Of Folks Don’t

Poll QuestionWe all know the unexpected happens.

Cars break down. Roofs leak. Jobs are eliminated.

Expenses like these are the stuff an emergency fund is for – right?

But a survey found 39% of people “probably/certainly” couldn’t come up with $2,000 to meet an unexpected expense in the next month.

That’s pretty frightening.

And it’s slightly higher than the percentage of people who were certain they could come up with that amount of cash, 35%. The 2012 National Financial Capability Study also found that 21% of the 25,000 respondents “probably” could.

The FINRA Investor Education Foundation, which conducted the survey, also found significant demographic difference for this “financial fragility,” or lack of liquidity.

Those most likely to be unable to meet a short-term expense fell into these groups:

  • Women
  • People ages 18 to 34
  • People with annual incomes less than $25,000
  • People with a high school diploma at best
  • African-Americans and Hispanics

The survey defined liquidity as being able to use savings, sell valuable possessions or borrow money from family or friends.

A lot of folks burned through their emergency funds during the recession, made serious cuts to their spending or, worst case scenario, relied on credit cards.

But as the economy improves, so should our financial mindset and this “fragility.”

We’re hoping that people aren’t just comfortable spending again. Saving needs to be a priority, especially if your stockpile of emergency cash is insufficient for an unexpected expense that might cross your path.

We know, we know, interest rates remain low. But having a savings account is always better than not having a savings account.

Because really, $2,000 shouldn’t break anyone’s bank.

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When was the last time you couldn't come up with $2,000?
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Comments (3)
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3 Existing Comments
  1. billy said:
    on April 14th at 12:29 pm

    Does the survey say if the $2k was actual cash savings, credit advance, 401k loan, etc?

  2. Mike Cetera said:
    on April 15th at 09:16 am

    Billy: The survey wasn’t terribly specific, mentioning only liquid savings. i wouldn’t consider a credit advance or a 401(k) loan liquid savings, though.

  3. María Elisabeth MUSSENDEN said:
    on April 17th at 05:53 am

    I loved this post. Today, we hear so little about saving, and so much encouragement to spend! Gone are the days where money was real, where you count the actual pennies! Now it’s plastic …… or…. virtual. You don’t keep track of it! How can we return to this consciousness about savings? How can banks encourage people to save?