Can't Buy Happiness?

Money, personality, and well-being

How Many People Have Money Saved for a Rainy Day?

Many people do not have $1,000 saved for an emergency.

A few years ago I read a story in CNN Money (Most Americans can't afford a $1,000 emergency expense) that reported over 60% of Americans did not have enough money in their savings or checking accounts to pay for a $1,000 emergency. I was shocked. Is it possible that only 36% of US adults have $1,000 in a savings account saved up for a rainy day? Well, maybe not.

The study CNN Money cited was a survey conducted by the National Foundation for Credit Counseling and there was something problematic with their study--the results were based on the NFCC's July 2011 Financial Literacy Opinion Index which was collected on their homepage ( So the only people included in the survey were individuals who would actively seek out "debt advice" and opt-in to complete a survey. Now, the results were starting to seem reasonable: of those people who would go to a debt advice website, and complete a financial literacy survey, only 36% of these individuals have $1,000 saved up for a rainy day.

Well, I have always been bothered by the fact we actually do not know how many US adults have $1,000 saved up for a rainy day. So, I added the same question the NFCC asked in one of our nationally representative surveys. We asked over 700 US adults "If you needed $1,000 for an unplanned expense, what would you do to obtain the money?" Here is what we found out from our representative US sample.

As the graph below shows only 60.7% of people have $1,000 saved for an emergency. That number is the exact opposite of what the NFCC found (which reported that 64% of "US adults" did not have have $1,000 saved for an emergency). Though, this still demonstrates that maybe as many as 40% of US adults would need to obtain the $1,000 through less than desirable methods (borrowing the money from friends or family, taking out a loan, getting a cash advance, selling or pawning some assets, or disregarding some other month expense).

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Most Americans can't afford a $1,000 emergency expense
If you needed $1,000 for an unplanned expense, what would you do to obtain the money?
So, even though the NFCC had a skewed sample, I do agree with Gail Cunningham, the spokesperson for the NFCC at the time of the survey, who said in their press release "without adequate savings, consumers have poor resolution choices when an emergency arises. People often say they can't afford to save, but the truth is that they can't afford not to."

At BeyondThePurchase.Org we help people make the connection between their spending habits – how do you spend your money and who do you spend it on – and their happiness. To learn about what might be influencing how you think about and spend your money, Register with Beyond The Purchase, then take a few of our spending habits quizzes:

How happy is your subconscious? Find out by taking our Implicit Happiness quiz.

How materialistic is your subconscious? Find out by taking our Implicit Materilism quiz.

Some people are gadget heads and some are foodies. Which do you spend your money on? Find out by taking our experiential buying quiz.

With these insights, you can better understand the ways in which your financial decisions affect your happiness. To read more about the connection between money and happiness, go to the Beyond the Purchase blog.

Ryan T. Howell, Ph.D., is an Assistant Professor of Psychology at San Francisco State University.


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