Two months ago, when quoting the CEO of cell phone insurer Assurant, who appeared on Bloomberg TV to discuss business trends, one of his quotes caught our attention: “the reality is, half of Americans can’t afford to write a $500 check,” Colberg said. We decided to look into the CEO’s claim about the woeful state of US finances. What we found is that according to a recent Bankrate survey of 1,000 adults, 57% of Americans don’t have enough cash to cover a mere $500 unexpected expense. Turns out the CEO was right. And while that may appear dire, it is a slight improvement from 2016, when 63% of U.S. residents said they wouldn’t be able to handle such an expense.
The Bankrate survey findings echoed research published last year by the Federal Reserve, which found that 46% of respondents said they would be challenged to come up with even less, or $400, to cover an emergency expense, and would likely borrow or sell something to afford it. When the Fed asked what types of emergency expenses Americans had actually faced in the last year, more than one out of five cited a major unexpected medical expense. The average expense: $2,782, or almost seven times higher than the Fed’s hypothetical $400 surprise bill.
How does this stunning statistic compare to some other developed nations?
It turns out that the state of half of US finances, deplorable as it may be is positively shining, not to mention “twice as good”, when compared to the country’s neighbor to the north, where a recent Ipsos survey on behalf of accounting firm MNP, found that more than half of Canadians are living within $200 per month of not being able to pay all their bills or meet their debt obligations. Needless to say, if $500 in savings is bad, half that amount is outright bizarre.