You may be wondering what type of emergency would warrant a $1,000 budget. A recent poll may answer your question.
The Financial Security Index survey showed that most Americans remain unprepared for any sudden expenses in the last 12 months. Only 39%, or more than one-third of households, said that they could cover such emergency spending with their savings account.
More than one-third of households in the U.S., or 34%, dealt with unexpected expenses in 2017. While this may be a small number, the fact remains that you may need to spend on something that was not part of your budget. This may include home repairs, a medical procedure, or when you lose your job.
Sometimes, even your money in the bank may not be enough to cover these expenses. In this case, there are many financing instruments, such as cash loan services. Taking out a personal loan in Utah or any other state served as an option for Americans, according to the survey.
Aside from personal loans, 19% of respondents use their credit card to cover any emergency expenses. Those who limit their spending on other things comprised 13% of respondents, while 12% said that they borrow from family or friends.
A household’s income also determines their likelihood of choosing to borrow money. Americans who earn below $30,000 per year, who are considered low-income earners, fall under this category. On the contrary, those who earn over $50,000 are more capable of using their own cash to cover emergency expenses.
An emergency savings fund should still be your best solution to unexpected expenses. When the need arises, you will be more inclined to borrow a smaller amount. How do you plan to cover unforeseen expenses?