Barriers to Saving and Policy Opportunities

The role of emergency savings in family financial security

Barriers to Saving and Policy Opportunities
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Access to savings in times of need may reduce hardship and maximize financial control.

This brief is the third in a series of three that explore how financial shocks and emergency savings are related to families’ financial well-being. Savings may help households cope with unexpected expenses and preserve wealth over the long run. Understanding the frequency and impact of events that might strain budgets, and the resources families have to cope with them, is crucial to building policies that promote financial health.

Many households are at risk of financial shocks, which can disrupt and derail their finances, and the savings most families have on hand are probably insufficient to overcome these challenges. Pew research has shown that the typical family would need to increase its liquid savings by more than $9,000 to reach even the level of savings that survey participants say households like their own should have. Understanding this discrepancy is key to designing and implementing efficient and effective public policy.

This brief explores how Americans think about their savings; how policymakers might enable diverse families to better prepare for, handle, and recover from financial challenges; and related economic factors that should be considered to ensure that policies and programs respond to families’ needs.

Key Findings

  • 71 percent of Americans surveyed face difficulty saving because of expenses they didn’t plan for.

    • 26 percent say this happens most months or just about every month. For households with little breathing room between income and expenses, small changes in either can be a big challenge.

  • 50 percent of Americans surveyed who said they had no savings actually had savings accounts.

    • People do not often think about their spending and savings as distinct categories. Many households mix spending money and savings in the same accounts, particularly when they are focused on the short term.

  • Creating tools that make saving automatic can help families build and rebuild savings.

    • Automatic mechanisms to generate savings have shown promise in the retirement savings field and could offer a valuable tool for building and rebuilding emergency savings.

  • Families may save more if they can access their money when they need it without paying fees or penalties.

    • Restrictions and penalties for withdrawing savings make it harder for families to be financially resilient. Savings products that provide flexibility would be an attractive option for many households.

  • Many families’ income and expenses vary from month to month. They need tools to help them save.

    • Giving consumers tools to help them better recognize the ebbs and flows of their finances might encourage them to build savings when they have surpluses, providing a pool of money to draw on when times are tight.


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