The percentage of Americans with no money saved for emergencies has risen to 28 percent, up from 24 percent a year ago, according to Bankrate’s Financial Security Index.
The recession and prolonged economic downturn has caused many to rethink how much money one should save for emergencies. The accepted rule of thumb has been to save enough funds to cover six months of living expenses. Now, some feel it would be more prudent to save at least a year’s worth of expenses or more, the financial planning website states.
The Financial Security Index found that about one-in-five people have enough savings to cover less than three months of expenses, while 42 percent say they have at least three months woth of cash saved for emergencies.
In this stagnant economy, a majority of people (72 percent) are concerned about just maintaining their current financial position, according to a first quarter study conducted by Millionaire Corner of homes with between $100,000 and $1 million (not including primary residence). This is up from 62 percent in 2011. This concern is felt especially by baby boomers in the 45-54 and 55-64 age brackets (each 75 percent).
Similarly, 67 percent of respondents said they are concerned about the financial situation of their children and grandchildren, up from 59 percent last year.
The youngest households surveyed (under the age of 45) are the most likely to be concerned about the level of debt they are currently carrying, an impediment to setting aside money for unforeseen circumstances and events.
Wealth, not surprisingly, is a factor in setting aside money for emergencies, the Financial Security Index found. Forty-five percent of high-income earners say they have hit the minimum recommendation of six months worth of cash set aside. Whereas only 9 percent of these high-earners say their emergency fund is bare, 52 percent of those earning less than $30,000 reported having no emergency money saved.
Give college graduates good marks for saving. Forty-one percent of respondents reported having enough savings to cover expenses for six months or more, compared with 14 percent of those with a high school education.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.