Why Most Americans Can’t Afford an Emergency

Dan Nicholson

Economic indicators are painting a rosy picture for 2024, but the reality for many Americans tells a different story. The resilience of the U.S. economy, marked by strong employment figures and moderated inflation rates, hides a troubling undercurrent—a widespread inability to weather financial storms. So why are so many Americans living on the brink of financial disaster despite apparent prosperity in the country?

Savings Accounts Are Running Dry

A recent survey by Bankrate revealed some concerning statistics about the state of Americans’ savings. Only 44% of people surveyed said they could handle an unexpected bill of $1,000 or more from their savings. When surprise expenses appear, 35% would have to borrow money, with most leaning on credit cards or asking for help from family and friends.

Inflation is a big contributor to the issue, with 63% citing this as the main barrier to saving. While some see rising interest rates as a chance to earn more on their savings, for the majority, the higher cost of living makes it impossible to set anything aside for a rainy day.

To put this in perspective, two-thirds of adults surveyed said that if they lost their main income, they would struggle to cover their living expenses for even a month. More than half feel uneasy about the amount of emergency savings they have, showing that financial security is a big concern for many.

Mark Hamrick, senior economic analyst for Bankrate, pointed out that despite some positive economic signs, the struggle to save remains a big hurdle for many. “All too many Americans continue to walk on thin ice, financially speaking.”

One of the more alarming trends is the increase in past years in “hardship withdrawals” from retirement accounts. By tapping into funds meant for the golden years, people are essentially borrowing from their future security—showing the desperation some face when confronted with immediate financial needs. 

Surprisingly, financial stress is affecting people across the income spectrum. Reports indicate that 27% of employees with salaries over $100,000 said they are living paycheck to paycheck, while 64% feel that financial stress detracts from their work productivity. 

In short, while the economy is doing surprisingly well in 2024, a critical issue remains: too many Americans are just one unexpected bill away from a financial crunch. It's a reminder that building up a safety net of savings is more important than ever.

What’s Making it Difficult to Save?

The root causes of these savings struggles are varied. Many are still feeling the aftermath of the pandemic's financial strain. During the Covid-19 pandemic, the economy hit a pause, and many Americans lost their incomes. 

At the same time, thanks to the government’s stimulus efforts, American households found themselves with an unexpected surplus of cash. However, this financial cushion didn't last. Over time, the extra savings from the pandemic years have been depleted, with consumers spending what they had saved.

The situation worsened as inflation surged after the pandemic, stretching household budgets even thinner. Meanwhile, the Federal Reserve embarked on a significant series of interest rate hikes, making borrowing more expensive. These developments have added to the difficulty of saving and managing finances in the current economic climate.

Devin Miller, CEO of SecureSave, noted in an interview with CNBC that “people are out of pandemic money” and are now “scratching and clawing to find money” wherever they can. Adding to the pressure is the fact that many Americans are dealing with accumulated credit card debt after borrowing to cover emergencies in the past few years.

According to surveys, the most commonly cited reason for not increasing savings this year was the pressure of inflation. Other reasons that were given included having too many expenses, having too much debt, and changes in income/employment.

As households strive to cover today's costs, saving for tomorrow becomes more and more challenging, emphasizing the need for strategies that address both immediate financial relief and long-term financial health.


In these economically uncertain times, the importance of building and maintaining a savings buffer cannot be overstated. As the landscape shifts with unpredictable challenges, from inflationary pressures to sudden income disruptions, a savings account stands as a critical defense. It not only offers a lifeline during unexpected emergencies but also ensures peace of mind and financial stability. Cultivating a habit of saving is essential for navigating the uncertainties of today's economy with confidence and security.





Dan Nicholson is the author of “Rigging the Game: How to Achieve Financial Certainty, Navigate Risk and Make Money on Your Own Terms,” deemed a best-seller by USA Today and The Wall Street Journal. In addition to founding the award-winning accounting and financial consulting firm Nth Degree CPAs, Dan has created and run multiple small businesses, including Certainty U and the Certified Certainty Advisor program.

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