National Bureau of Economic Research ReportAccording to a study conducted by the National Bureau of Economic Research, five out of ten Americans would struggle to raise $2,000 should some straitened circumstances come their way. Additional expenses, such as an unforeseen home repair or unexpected auto accidents, sudden legal expenses or a major medical bill, would definitely take a toll on their monthly paycheck.
About 28% are “certain” that they could not raise $2,000 if given a limited time to pay off unexpected bills. Moreover, 22% said they are “uncertain” whether they can cope with an extra $2,000 of additional debt.
Only 25% of Americans are sure that they would be able to raise extra funds.
Of the 1,900 respondents, the majority would rely on the financing strategies available for them. Financial schemes such as bank loans or cash advances serve as a lifeline during such financial struggles.
More specifically, the study shows that 60% would have to use their savings, 34.2% would have to rely on their families and friends for financial support and 29.5% said they would consider applying for financing schemes such as an unsecured loan, reverse mortgage, or use their home equity and their credit cards. Tightening on personal and family expenditure is also considered as an excellent way of raising emergency funds.
The National Bureau of Economic Research has also conducted the same survey on several other countries, including the Netherlands, Portugal, Italy, Germany, the United Kingdom, Canada and France. Interestingly, America is listed among the countries least able to cope with financial emergencies. The list also includes Germany and the United Kingdom, which both have 50% ‘financially unprepared households.’
On the other hand, people from the Netherlands, Italy and Canada are best able to cope with unexpected financial problems. An impressive 57.7% of the respondents from the Netherlands said that they would certainly be able to raise $2,000, at a pinch.
The fact that on a rainy day almost half of the residents of USA don’t have even $2000 to sustain, is an alarming situation.