These Americans have most reason to fear an unexpected financial emergency

September 30, 2017
By Quentin Fottrell, MarketWatch

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One unexpected bill could wreak havoc on millions of people
How stable are Americans' finances? Judging by several recent studies, not a lot.
A financial emergency can spell trouble for young Americans:
-- 49% of millennials aged 18 to 36 have insufficient funds to cover the costs of a $500 emergency compared to 34% of older adults
-- 28% of Americans ages 37 and older said they had no money set aside to cover the cost of an unexpected emergency versus 34% of millennials
-- 36% of older Americans said they had $8,000 or more set aside for emergency expenses, but only 15% of millennials could say the same
That's according to the "HomeServe Biannual State of the Home Survey" released Friday; Harris Poll surveyed 2,000 nationally representative adults. What's more, nearly one-fifth of millennials described the state of their household finances as terrible or poor, while 39% said they were excellent and 34% said they were good. Only 9% of that age group could say they were excellent. In contrast, 13% of all those surveyed described their finances as excellent.
What do other studies on surprise bills say?
This echoes another report released by the Consumer Financial Protection Bureau earlier this week (, which found that nearly half of Americans had trouble paying their bills, and over one-third have faced hardships such as running out of food, not being able to afford a place to live, or not having enough money to pay for medical treatment. That survey polled 6,300 Americans. (You can take the CFPB survey here ( to see how you compare.)
Why are millennials under financial pressure?
Younger Americans also have bigger problems. They shoulder more student loan debt than any other generation and face house prices that are far higher than their parents did at their age in a post-recession environment of stagnant wages. Student loan debt has reached $1.3 trillion as the cost of college has soared. And spending no more than 30% of their income on rent or a mortgage, which was deemed a golden rule for decades, is now almost impossible for many young Americans.
The Federal Reserve recently cited spikes in U.S. debt:
-- Americans currently have over $1 trillion in outstanding revolving credit
-- Revolving credit had been growing at an annual growth rate of 4.9%
-- Household debt recently hit $12.7 trillion, exceeding the 2008 peak
Half of millennials regret spending money on coffee and eating out, while 62% regret fast food, according to this study of people ( aged 20 to 26 by Durham, N.C.-based Common Cents Lab, a financial research lab at Duke University. We're more likely to regret guilty pleasures, said Dan Ariely, behavioral economist at Duke. Millennials spend more than an average of $2,300 more per year than older generations groceries, gas, restaurants, coffee and cell phone bills.
What do young people spend money on?
Millennials are falling victim to common financial vices, such as spending money in coffee shops, a separate study by personal-finance site concluded ( The average millennial dines at a restaurant or buys take-out food five times per week and nearly 30% of this age group say they buy coffee at least three times per week. More than half of millennials (54%) eat out at least three times a week, compared to roughly one-third of Generation X-ers and baby boomers.
Why should you care about this latest data?
Americans may have forgotten the lessons from the Great Recession and they're under pressure to meet necessities rather than luxuries. Spending on necessities -- such as food, utilities, and phone bills -- ranked first (43%) among financial priorities, the latest survey found, followed by eating out (28%) and home-related expenses (26%) such as maintenance, home renovation and repairs. Medical expenses (24%) ranked fourth as the category where people feel like they overspend.