ACCI Conference 2024

Widespread consensus exists on the importance of emergency savings – funds set aside for unexpected expenses or declines in income – to protect themselves against economic hardship. Yet, no definition exists on what constitutes adequate emergency savings. This article reviews commonly used measures of emergency savings across five publicly available surveys to understand how different measures yield different estimates of U.S. households with emergency savings. We discuss conceptual tensions in measures of emergency savings and find that, empirically, the portion of households with emergency savings is low across differing measures. Disaggregated by household characteristics, households with emergency savings differ based on race/ethnicity, household income, employment, and age. Emergency savings is highly correlated with financial inclusion. Some of these characteristics persist even after a regression-based adjustment for household characteristics. We suggest several workplace emergency savings programs that enhance financial wellbeing of households with below median income; households headed by non-white adults, particularly African American and Hispanics; and households headed by disabled adults.

Author(s): Katie Fitzpatrick, Manita Rao