Most Americans are not prepared for a financial emergency.
In fact, according to a Bankrate survey, 59% of Americans don’t have enough to cover an unexpected $1,000 emergency expense.
“We are essentially a paycheck-to-paycheck nation,” Bankrate Senior Economic Analyst Mark Hamrick said, as quoted by CBS News. “Fewer Americans have the equivalent of a financial safety net to cover inevitable unexpected expenses, despite low unemployment and steady growth. This is one of the consequences of elevated prices stemming from inflation, the impacts of which are still being felt.”
According to Suze Orman’s SecureSave, about 67% of Americans don’t have enough saved for even a $400 expense. Worse, she says about 54% of those surveyed saw their savings decrease over the last year, meaning even a small unexpected expense could push them into debt.
Orman Says an Emergency Fund is Essential
According to Orman, some experts say you should save three to six months’ worth of expenses for emergencies. Easier said than done. So, the next best way to prepare is why define your own financial situation, which includes how stable your income is, your level of risk tolerance, and what you’ll need to set aside for children or other dependents.
“The more unstable your income is, the more you should probably keep in an emergency fund. Also, the higher your insurance deductibles are, the more you should be keeping in an emergency fund,” says Erik M. Baskin, founder of Baskin Financial Planning in Colorado Springs, Colorado, as quoted by BankRate.com. “A family that has two stable incomes and no kids needs much less in emergency savings than a single-income household with four kids.”
To help, Orman suggests…
Budget Your Money to See Where You Can Save
Without a budget, many of us lose track of what’s coming in financially and what’s going out.
In fact, when others have asked me for financial advice, my top question is, What are you spending on? Unfortunately, I’m often met with a deer-in-the-headlights stare and a response of “I don’t know.” Unfortunately, not knowing will destroy you financially.
Automate Your Savings
One of the best ways to set aside money for savings is by setting up automatic deposits.
“It can be $10 a month, $200, or $1,000. That’s up to you, and each account can have a different contribution amount,” Orman said, as also quoted by GoBankingRates.com. “All I insist is that you make this automatic. That is a proven way to stay committed to a savings goal. Having money zapped from your checking account into your savings account is free, too. The set it and forget it approach is how you will reach your savings goals.”
Use Debit Cards Instead of Credit Cards
Unless you can pay off your entire credit card bill every month, avoid using credit cards. Instead, rely on cash or debit cards. “There is no more expensive form of bondage than spending more than you have and paying interest of 15% or more on your credit card,” Orman said, as quoted by GoBankingRates.com.
Get Out of Credit Card Debt
Many of us think it’s easier to just charge everything until they get the bill, plus interest.
According to LendingTree.com, Americans have about $1.209 trillion in debt. In addition, “according to TransUnion, one of the three biggest credit reporting agencies in the U.S., the average credit card debt per American in June 2025 was $6,473. That’s up $144 from $6,329 in June 2024,” added Forbes.com.
In short, it’s better to get rid of credit cards if you can, and just use cash.
Cut out Ridiculous Expenses
Going out to eat contributes to massive credit card debt, too, which can weigh on you in retirement. Most people don’t realize how much money they spend by heading to the drive-through or going out to a fancy restaurant once in a while. Some of us, including me, stop by Dunkin every morning and spend about $20 on coffee and a hot bagel, which comes out to about $600 a month. People are literally eating themselves into debt.
According to Bankrate.com, “Americans say they’re willing to go into debt for the sake of experiences this year. Nearly 2 in 5 (38 percent) U.S. adults are willing to go into debt to travel, dine out, or see live entertainment, according to our Discretionary Spending Survey. The highest percentage of people would be willing to take on debt to travel, at 27 percent, followed by dining out (14 percent) and live entertainment (13 percent).”
In short, by budgeting and reducing expenses, you can be well prepared for just about anything.
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