The survey discovered that if respondents or the primary breadwinner in their home lost their job today, the majority of Americans (61 percent) could only live on their savings for three months or less, with 38 percent saying they do not even have enough funds to sustain their expenses for one month.

 

Experts have traditionally recommended having an emergency fund that could last three to six months1, but HSBC’s new survey finds that only 39 percent of respondents are prepared for this. Today, experts are beginning to recommend having enough savings on hand to last at least twelve months2; by these standards, only 11 percent of Americans are adequately prepared.

 

“While we have seen a robust increase in the personal savings rate in 2009, and we are moving in the right direction, what is clear is that it’s not enough,” said David Goeden, Executive Vice President, Personal Financial Services, HSBC Bank USA, N.A. “More than ever, Americans are aware of the importance of having an emergency fund; yet, despite this heightened awareness – and rising unemployment rates – there is still a sweeping lack of preparedness for the unexpected.”

 

Although the length of time people can live off of their savings is broadly correlated with income, the lack of a sufficient emergency fund is a problem that transcends income levels.

 

Fifty-one percent of respondents with a household income (HHI) of less than $50,000 could only live on savings for less than one month. Yet despite having a higher HHI, 29 percent of respondents with a HHI of more than $100,000 could only live on their savings for up to three months. Those who are prepared for less than one month include families with children (44 percent) and adults age 55 and older (31 percent).

Americans Are Cutting Spending and Have Good Intentions

Although Americans’ savings habits do not generally meet the needs of emergency funds, the survey did uncover that they have good intentions when it comes to saving and financial responsibility. When asked what they would do if they unexpectedly received $1,000, 63 percent said they would pay bills, and nearly 40 percent said they would put all or the majority into savings.

 

The survey confirmed that many Americans have indeed begun to make changes in how they spend.

 

Over the past six months:

“Americans recognize the importance of saving, yet there’s a switch that needs to be flipped in order to embrace a savings mentality. Given life’s uncertainties, saving is a responsibility, not just a luxury,” continued Goeden.