Here at LearnVest, we’re all for celebrating financial progress.
So, on the one hand, we’re happy to hear that 58% of Americans currently have more savings socked away than they owe in credit card debt—a big improvement over last year’s 51%, according to a new Bankrate.com report.
Yet on the other hand, the survey also found that as many as 24% of people carry more debt than they have in an emergency fund. Meanwhile, 13% have no debt whatsoever—but they also lack emergency savings.
And that can spell trouble: “These numbers mean that three out of every eight Americans are teetering on the edge of financial disaster,” Greg McBride, Bankrate.com’s chief financial analyst, said in a press release.
In other words, an unexpected expense—like a medical emergency or a sudden job loss—would leave a fair number of Americans with few financial options.
Unfortunately, one demo seems to be particularly unprepared. Gen Xers, or those between the ages of 30 and 49, were found to carry the worst debt-to-savings-ratio—perhaps because of sandwich generation concerns like paying for kids’ college and taking care of older parents.
Millennials were found to be in better financial shape, which suggests that the recession may have scared them into saving.
While McBride notes that slow income growth and lingering effects of the downturn are partly to blame for Americans’ lackluster savings habits, it’s also a question of motivation: “Savings is not a high enough priority for American households,” he told Bankrate.com. “Even in the absence of credit card debt, the majority of households don’t have enough emergency savings to cover three months’ worth of expenses.”
Find yourself flirting with financial disaster? Learn how to sock away more with this savings checklist.