Majority of Americans can’t afford surprise expenses

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A recent survey revealed that the majority of Americans do not have enough money to cover a $500 unexpected expense.

The Bankrate survey found that 57 percent of the 1,000 adults questioned could not afford a $500 outlay of cash, a slight improvement from 2016 when 63 percent claimed the same.

Findings in the survey highlight the fact that the so-called economic recovery of the past eight years has not reached nearly half of the U.S. population, which lives from paycheck to paycheck.

Although the recession officially ended over seven years ago, many households continue to struggle with basic finances.

Job growth during the Obama administration was seen mainly in minimum wage industries, meaning earnings have been slow to recover.

Income levels peaked in 1999 and the average American household now earns 2.4 percent less than they did 18 years ago.

While earnings are less, costs for essentials, such as housing and child care, have risen faster than the inflation rate, placing pressure on household budgets and making saving money more challenging.

The survey found that approximately four out of 10 Americans have enough money saved to fund a surprise $500 expense. Twenty-one percent reported that they would rely on a credit card, and 20 percent said they would cut back on other expenses. Eleven percent said they would borrow money from family or friends.

Among Americans who earn more than $75,000 annually — a third more than the typical U.S. household earns — nearly half claimed that they could not fund an unexpected $500 expense.

Millennials emerged as the generation most likely able to afford an emergency cost, with 47 percent saying they have enough money saved to pay for one.

Bankrate reported that when it comes to reducing spending, respondents said that dining out is the first place they would cut back, with six out of 10 saying they would eat out less often.

The least likely expense to be dialed back is a mobile phone plan, with only 35 percent of respondents willing to sacrifice services to save money.

Bankrate concludes that Americans would rather go hungry than give up their cell phones.

H/T: Zero Hedge

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