Survey: Americans Can’t Cover Emergency Expenses
ByJohn Russo
UpdatedMay 1, 2025
- About half of people surveyed by Freedom Debt Relief have an emergency fund.
- Experts recommend saving enough to cover three to six months of expenses.
- It’s okay to start small and build your emergency fund over time as your budget allows.
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A well-stocked emergency fund is a great tool for avoiding debt from an unexpected expense, like a sudden car repair or an unplanned medical bill. How much you should have in your emergency fund is a matter of income and expenses. Conventional wisdom says you should aim to set aside three to six months' worth of expenses that you can access in a hurry. That could help you avoid the need for debt relief down the line.
But just as a journey of a thousand miles starts with a single step, even $100 set aside is a great start to an emergency fund.
We asked people about their savings and debt in a recent Freedom Debt Relief survey, and it turns out that about half still have some work to do when it comes to building their emergency funds. Here's a look at what respondents said and some tips on how to put a little more into your own emergency fund.
How Much Are Americans Saving for Emergency Expenses?
The good news is that just over half of respondents (53%) said they have some money set aside to cover emergency expenses. About 58% said they have more than $1,000 but less than $5,000 saved.
Why You Shouldn't Use Credit Cards as Your Emergency Fund
Without enough savings to cover unexpected costs, you may wind up relying on credit cards to handle these expenses. Using credit cards for an emergency expense can be fine in the short term, especially if balances are paid in full each month. But long term, relying on credit cards without any savings could put you in financial danger.
Credit cards typically have very high interest rates, which means any debt you carry from month to month will rack up interest very quickly. That interest could make paying off your credit card debt harder, especially if you're already having financial problems.
A solid emergency fund could make a big difference in helping you weather financial challenges. Even if you use your credit card for the sake of convenience at the time, you'll know you have the cash to pay it in full without taking on expensive debt.
Planning Your Emergency Fund
Anything you set aside for your emergency fund is better than having nothing set aside at all. Even $5 or $10 a week that you put into emergency savings means you'll have $260 or $520 at the end of a year to help cover unexpected expenses.
Watching your savings mount up can be motivating. When you notice your balance start to grow and you know that every few dollars you put in is going to count, you might well be inspired to boost how much you put in each week or month.
A common recommendation is to have at least three to six months of expenses set aside in case of job loss or another major financial emergency.
That said, anything you save could come in handy when an unexpected expense crops up.
Here’s what you could have if you save $10, $20, or $25 each week. Note that you’ll wind up with a bit more if you keep your money in a high-yield savings account. In the first year, the interest may not be that impressive, but it grows faster later on. We assume an initial deposit of $5 and 3% interest on the savings.
Weekly amount | 1 year | 3 years | 5 years |
---|---|---|---|
$10 | $525 | $1,613 | $2,769 |
$20 | $1,045 | $3,221 | $5,532 |
$25 | $1,305 | $4,025 | $6,913 |
These savings amounts should look very attainable. Most of us eat at restaurants now and then or grab an occasional coffee. Putting $25 a week into savings is a great goal. As long as you do it and leave the money alone, you could have thousands built up in the account before you know it.
Here's how these savings goals could relate to your monthly pay:
Monthly Pay | 3 Months | 6 Months |
---|---|---|
$1,500 | $4,500 | $9,000 |
$2,000 | $6,000 | $12,000 |
$2,500 | $7,500 | $15,000 |
$3,000 | $9,000 | $18,000 |
$3,500 | $10,500 | $21,000 |
$4,000 | $12,000 | $24,000 |
$4,500 | $13,500 | $27,000 |
$5,000 | $15,000 | $30,000 |
Yes, some of those numbers are bound to raise eyebrows. Many people simply can’t imagine having five figures in their emergency fund. It’s important to visualize yourself with this level of financial security. Think of how much money you spend in any given month and realize that you’re already living at these levels. You're definitely the kind of person who can have a five-figure bank account, and you deserve it.
Your emergency fund should be available any time you need it, so it’s best to keep it in a high-yield savings or money market account where you can access your money quickly in an emergency.
How to Save More for Emergency Expenses
Many Americans need to increase their savings. If you’re one of them, there’s no time like the present to get started. A common saying in personal finance is, the best time to start saving is yesterday. The second-best time to start is today. Don’t worry about what you did or didn’t do in the past. You can change the course of your financial path—and it really does bear repeating: anything extra you can save is better than nothing.
Here are a few tips to boost your emergency fund:
Create a budget. If you don't already have one, making a budget is a huge first step to taking control of your finances. You don't need a line item for everything, but knowing where your money is going is vital to managing it well.
Trim some expenses. When you know what you’re spending money on, you may be surprised by what you can potentially cull. Any subscriptions you don't need, memberships you don't use, or other forgotten expenses should be the first to go. Remember—it doesn’t have to be forever. Cuts can be temporary.
Set goals. Having a clear goal in mind can help you stay motivated. Set your big goal, then break it into smaller, mangeable milestones so you can see progress.
Get a savings app. A good savings app can help automate a lot of the boring stuff and make reaching your financial goals that much easier.
Coupon and sale shop. Coupons may feel old-school, but they're alive and well—and digital. You can still find physical coupons to cut if you like the zen of scissoring the Sunday paper, or you can use store and third-party coupon apps to save money in a few clicks.
Get rid of your high-interest debt. You might be surprised how much you can set aside once you get rid of expensive interest fees. Focus on paying off your high-interest debt, like credit cards, to really free up some cash.
Increase your income. If you've already cut what you can, your best option is to increase your income so you have more money to save. Start a side hustle, ask for a raise, or even consider changing companies to find a new role with better pay.
Give Your Finances a Boost
Learning how to deal with debt, money, and saving for your future is important, but it doesn’t need to be hard. If you’re scouting solutions for your debt, Freedom Debt Relief has helped more than one million Americans and settled over $18B in debt. Talk to one of our Certified Debt Consultants today to find out if Freedom Debt Relief could be the right solution for your debt.
Debt relief stats and trends
We looked at a sample of data from Freedom Debt Relief of people seeking a debt relief program during November 2024. The data uncovers various trends and statistics about people seeking debt help.
Age distribution of debt relief seekers
Debt affects people of all ages, but some age groups are more likely to seek help than others. In November 2024, the average age of people seeking debt relief was 49. The data showed that 17% were over 65, and 18% were between 26-35. Financial hardships can affect anyone, no matter their age, and you can never be too young or too old to seek help.
Credit card debt - average debt by selected states.
According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) the average credit card debt for those with a balance was $6,021. The percentage of families with credit card debt was 45%. (Note: It used 2022 data).
Unsurprisingly, the level of credit card debt among those seeking debt relief was much higher. According to November 2024 data, 88% of the debt relief seekers had a credit card balance. The average credit card balance was $15,618.
Here's a quick look at the top five states based on average credit card balance.
State | Average credit card balance | Average # of open credit card tradelines | Average credit limit | Average Credit Utilization |
---|---|---|---|---|
District of Columbia | $16,967 | 7 | $24,102 | 121% |
Arkansas | $12,989 | 9 | $28,791 | 83% |
Tennessee | $13,822 | 9 | $27,261 | 82% |
New Mexico | $11,860 | 8 | $25,731 | 82% |
Kentucky | $12,834 | 8 | $26,156 | 81% |
The statistics are based on all debt relief seekers with a credit card balance over $0.
Are you starting to navigate your finances? Or planning for your retirement? These insights can help you make informed choices. They can help you work toward financial stability and security.
Support for a Brighter Future
No matter your age, FICO score, or debt level, seeking debt relief can provide the support you need. Take control of your financial future by taking the first step today.
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How much money should I have in my emergency fund?
Start with a goal of saving $1,000, or even $500. The next level could be enough to cover all your expenses for three months without any money coming in. Eventually, you want to build this up to six months' worth. This is going to take time, and unexpected expenses will occasionally prevent you from saving. That's why your goals should be milestones, not a faraway finish line.
How do I save for an emergency fund?
Start small and build it up over time. Set aside money every week, even if it’s just a few dollars, before you spend money on the items in your budget. People who try to save whatever’s leftover after spending often find that there’s nothing left. Pay yourself first.
Where should I keep my emergency fund?
Your emergency fund should be immediately accessible without a penalty. That would usually mean in a savings account at a bank or credit union. Choose a high-yield savings account so that you can earn interest while you save. Online banks tend to pay the most interest on savings.
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