Could you weather an unexpected financial shock – a broken bone, a leaky roof, a trip to the hospital or a layoff at your company?
Financial emergencies like these are distressingly common for American families, according to new research by the Pew Charitable Trusts. In a survey of more than 7,800 U.S. households, Pew found that 60 percent of Americans have experienced a financial shock – such as a major home or car repair, an illness or a pay cut – within the last 12 months. The median cost of these emergencies: $2,000.
Moreover, the impact of a single financial shock can reverberate through a family’s finances for months. Pew found that nearly half of households who suffered a financial crisis still hadn’t fully recovered their finances six months later, and more than half found themselves “destabilized” by the shock – having trouble making ends meet.
“The proportion of shocks that was destabilizing was a surprise to us,” said Pew Research Officer Clinton Key. “The other thing that was surprising was the number of high-income households – households we generally don’t worry about when we think of financial precariousness or financial instability – that were destabilized by financial shocks.”