August 26, 2011

A National Foundation for Credit Counseling Poll

A recent online poll released by the NFCC (National Foundation for Credit Counseling) revealed that a majority of American consumers don’t have enough savings to cover a $1000 emergency expense. Only 36 percent of respondents said that they would have enough to cover a $1000 unplanned expense, the remaining 64 percent of those polled

stated that they would have to rely on other resources.

Here are the results from that poll:

  • 36% of consumers had enough to in their savings account to cover their expenses.
  • 9% of those polled would have to take out a loan.
  • 17% of American consumers would have to borrow from friends of family.
  • 9% responded that they would take out a cash advance on their credit card.
  • 17% of those polled would have to disregard other financial obligations.
  • 12% of those polled would have to sell or pawn their assets to cover an unplanned emergency expense.

The American Consumer

The report uncovers some alarming data on the current state of the American consumer and even though the poll doesn’t go into details of reasons why two-thirds of Americans don’t have a safety net, it’s very apparent that many individuals are still living check-to-check. There could be several factors that weigh into these statistics, for example many of those polled could be college-aged or in their early twenties. Another reason could be that many of those polled could be unemployed or severely underemployed.

The most disturbing statistic revealed from the poll was that 17% of consumers would disregard other financial obligations in order to cover an emergency expense. This option could have huge consequences and could leave a consumer even deeper in debt, but financial planning can alleviate this. Missing a mortgage payment, skipping out on the rent or disregarding credit card payments will not only put an individual back financially it will have a negative impact on one’s credit rating.

“Without adequate savings, consumers have poor resolution choices when an emergency arises,” said Gail Cunningham, spokesperson for the NFCC. “People often say they can’t afford to save, but the truth is that they can’t afford not to.”

Setting a Monthly Budget

Regardless of why 64% of Americans don’t have an emergency expense, it’s clear that many consumers have not set up a monthly budget.

“Selecting any option other than taking the money from savings should be a red flag,” continued Cunningham. “If saving money has always seemed out of reach, there is no better time than now to get to the root of the problem and protect yourself, your family and your financial future.”

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.

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