How well do North Americans handle an unexpected $1,000 expense?
Photo by Mikhail Nilov
When faced with an unexpected $1,000 expense, approximately a third of Americans would borrow the money, according to a new Bankrate survey. This may involve tapping credit cards, seeking assistance from friends or family, or resorting to personal loans. Most would not turn to cash savings because they don’t have it, the personal finance website found. Fewer than half of Americans, 44%, say they can afford to pay a $1,000 emergency expense from their savings, according to Bankrate’s survey.
North of the border, Canadians gave a similar response. According to a 2023 survey by Statistics Canada, 26% of Canadians reported that they wouldn’t have the means to pay an unforeseen cost of $500. Despite concerns about rising fuel and food prices, a significant portion (44%) expressed greater worry about their household's ability to afford housing or rent.
The topic spurred some Canadians to take the issue up in online forums. In a thread on Reddit, one user posed the question, "How many of you could weather a $1,000 unexpected expense?" The responses were varied. Some were confident in their ability to manage such an expense, with one user stating, "Quite easily, and it happens disturbingly often, unfortunately." Others voiced their doubts, stressing the financial strain of even smaller sudden costs. "Wouldn’t be able to handle $100 of unexpected expenses," wrote one person, while another shared a personal experience, revealing, "Recently happened, it was $700 actually. Took a month, and I had to borrow it from someone."
Source: OECD
The underlying issue is the inadequate level of savings, according to experts. A significant contributing factor is the lack of financial skills needed for effective saving. Low levels of financial literacy tend to lead to poor financial outcomes, as highlighted by the TIAA Institute-GFLEC Personal Finance Index's annual assessment of financial literacy among U.S. adults.
What can you do to help members at your credit union?
One of the best ways to improve the financial capability of your members is through a professionally curated financial education program. A program with the breadth of topics needed to provide a comprehensive financial education. Is produced in an entertaining and engaging style. And is structured to deliver content across different media.
Our program, It’s a Money Thing, is worth checking out as it delivers on each of these qualities, plus it contains 48 financial topics; 8 of which address saving money.
However, while loud budgeting may be capturing attention, there are other fundamental financial literacy principles that deserve recognition—topics such as borrowing, credit, retirement saving, investing, insurance and taxes, to name a few. At Currency Marketing, we create and distribute financial content through credit unions across North America to reach and educate their members (and potential members) in the communities they serve. Our program, It's a Money Thing, covers dozens of financial topics, each designed to educate and entertain, suitable for all digital formats and social channels—from websites to TikTok.
Financial trends may come and go, but a financial education program is a lasting investment. Over the long term, it provides the opportunity to enhance the financial well-being of both credit unions and their members. To learn more, please click the links below.
Interested in learning more. Explore or website or book a demo over Zoom. I am always game to talk about how our program might be a good fit at your credit union.
Tim McAlpine is the Founder & CEO of Currency Marketing. He is best known for developing the It's a Money Thing Financial Education Program that credit unions from around North America are using to connect with new young adult members. He is also a driving force behind CUES Emerge, an emerging leader program that combines online learning, peer collaboration and an exciting competition component.
