Barriers to Saving and Policy Opportunities

The role of emergency savings in family financial security

Barriers to Saving and Policy Opportunities
emergency savings briefGetty Images

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.

    Tweet
  • 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.

    Tweet
  • 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.

    Tweet
  • 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.

    Tweet
  • 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.

    Tweet

Spotlight on Mental Health

Composite image of modern city network communication concept

Learn the Basics of Broadband from Our Limited Series

Sign up for our four-week email course on Broadband Basics

Quick View

How does broadband internet reach our homes, phones, and tablets? What kind of infrastructure connects us all together? What are the major barriers to broadband access for American communities?

What Is Antibiotic Resistance—and How Can We Fight It?

Sign up for our four-week email series The Race Against Resistance.

Quick View

Antibiotic-resistant bacteria, also known as “superbugs,” are a major threat to modern medicine. But how does resistance work, and what can we do to slow the spread? Read personal stories, expert accounts, and more for the answers to those questions in our four-week email series: Slowing Superbugs.

Explore Pew’s new and improved
Fiscal 50 interactive

Your state's stats are more accessible than ever with our new and improved Fiscal 50 interactive:

  • Maps, trends, and customizable charts
  • 50-state rankings
  • Analysis of what it all means
  • Shareable graphics and downloadable data
  • Proven fiscal policy strategies

Explore

Welcome to the new Fiscal 50

Key changes include:

  • State pages that help you keep track of trends in your home state and provide national and regional context.
  • Interactive indicator pages with highly customizable and shareable data visualizations.
  • A Budget Threads feature that offers Pew’s read on the latest state fiscal news.

Learn more about the new and improved Fiscal 50.