If recent years have taught us anything, it’s that anything can happen. 

But while most of us have learned to expect the unexpected, far too many Americans are still unable to save for the unexpected — and this savings gap is setting the stage for decades of financial fallout. 

The state of emergency savings today

According to a January 2024 study,

  • Americans’ emergency funds are growing — but the gap is still massive. While the number of U.S. adults who report having more emergency savings than they did a year ago has increased slightly, only 30% have enough savings to cover at least six months of expenses, a goal that many experts recommend working towards. Meanwhile, 30% say their emergency fund would cover less than three months of expenses — and most concerning of all, nearly a quarter say they have no emergency savings whatsoever. 
  • For many, an unplanned financial hurdle would be devastating. If faced with an emergency expense of $1,000 or more, only 44% of U.S. adults say they’d be able to cover it with savings; 35% would turn to credit cards or borrow money to cover that cost. If they were to lose their job tomorrow, two-thirds of adults would be worried about affording next month’s basic living expenses. 
  • Most are concerned by the state of their emergency savings. Most U.S. adults don’t feel good about their current level of emergency savings, with a third saying they’re “very uncomfortable” with the shape of their rainy day fund. And that’s not for lack of trying: more than half contribute to their emergency fund at least monthly.
  • Without help, the outlook is grim. Of those whose emergency savings fall short, more than half expect it to take years to catch up — if they ever catch up at all. 16% think it will take more than five years to get on track, 22% don’t know how long it will take, and 13% don’t think their emergency funds will ever be on track.

Most barriers to emergency savings are beyond consumers’ control

The majority of Americans, regardless of their emergency savings status, believe that saving for unplanned, urgent expenses is important. Despite that awareness, building a strong rainy day fund is a goal that remains out of reach for many — to no fault of their own.

  • 63% of U.S. adults cite rising inflation and living costs as a deterrent to saving, and 45% say that surging interest rates are to blame.
  • More than a third of Americans report that their credit card debt exceeds the value of their emergency fund; 43% of those with credit card debt say they carry a balance as the result of an emergency expense.
  • Competing financial obligations make it more difficult to build emergency savings: only 14% of student loan borrowers have enough saved to cover six months of expenses, compared to 1 in 3 U.S. adults without student debt. 

Certain demographics are disproportionately impacted

Thanks to a myriad of systemic inequities and inherited economic turmoil, women, people of color, and younger Americans are more likely to struggle to meet many markers of financial wellbeing. And — unsurprisingly — emergency savings is no exception.

  • 53% of women have an emergency fund, compared to 62% of men.
  • 60% of white adults have enough emergency savings to cover three months’ worth of expenses, far outpacing Black (40%) and Hispanic (43%) adults.
  • 32% of Gen Z and 46% of Millennials owe more in credit card debt than they have saved in an emergency fund, compared to fewer than a quarter of Baby Boomers.

Inadequate emergency savings can lead to major consequences — and not just financially

To be sure, inadequate emergency savings can lead to devastating financial consequences that take decades to bounce back from. But the impacts of being financially unprepared for an emergency or loss of income are more than just wallet-deep. 

  • Insufficient emergency savings is a top money-related driver of poor mental health among U.S. adults.
  • Each year, the average full-time employee spends nearly a month’s worth of workdays worrying about their personal finances when they’re supposed to be on the clock.
  • Compared to colleagues that don’t experience financial stress, financially stressed workers are twice as likely to seek new job opportunities and are less likely to feel a sense of belonging at work.

A path forward

Workplace outcomes are inextricably connected to financial and emotional wellbeing — which positions employers to play a critical role in addressing the emergency savings crisis. And with emergency savings support ranking as one of the modern workforce’s most-requested benefits, now is the time for employers to step up to the plate.

Here’s how employers can take action:

  • Make it easier to save.  When it comes to building healthy savings habits, getting started is often the hardest step. Employers can remove this barrier to entry by offering self-guided emergency savings tools, and taking a ‘opt-out’ approach to program design by leveraging automatic enrollment and payroll deductions.
  • Offer direct support. Demand for employer-sponsored emergency savings account (ESAs) benefits is soaring, with 90% of working Americans saying an employer-matched ESA benefit would encourage them to pursue a new job opportunity. Plus, a new provision from SECURE Act 2.0 allows employers to match what employees contribute to a pension-linked ESA with tax-advantaged retirement contributions.
  • Promote financial literacy skills. Benefits that help narrow the knowledge gap in financial literacy — including coaching, training, and self-guided content — can transform employees’ personal financial outcomes and cultivate a more engaged, more loyal workforce. Case in point: 61% of employees say they are more likely to stay with an employer that provides financial wellness training and resources, and those who receive these benefits report higher levels of job satisfaction.