June 27, 2017

No, Most Americans Aren't Totally Broke


Over on The Simple Dollar someone asked about an article on CNN with the headline of "6 in 10 Americans don't have $500 in savings"     The QA exchange on that was someone asking if that is real and Trent saying he believes it.

I don't believe that 60% of Americans don't have $500.

It seems that we're told by the press over and over that most Americans are living paycheck to paycheck or don't have $1000 or $500 or $X in the bank or similar things.    I've generally accepted this in stride as most people probably do.

But here's the big problem with that claim.    Its based on a survey from Bankrate that asked people how they'd handle an emergency bill.   But I can't find any real details on how the question was asked.   If they just asked "how would you pay for a $500 -1000 emergency expense?" and the answers were just a list of items like savings, credit card, cut spending, etc. then you'll get some wrong results there.   I personally would use a credit card and I'd answer that way.   The article then assumes (wrongly) that I don't have $500 in savings.   But I use credit cards for most everything to get my bonus points.

Survey of Consumer Finances of 2013 has a lot of data on personal finances.    They say specifically how many people have checking and savings accounts and what the mean and median balances are.   93.2% of people have accounts and the median balance was $4100.   That means that 46% of people have over $4100.   This specific data directly refused the idea that 60% (6 in 10) of people don't have $500 in savings.

I'm sure that there are is an unfortunately high amount of people in the nation who don't have $500 available.    But its not 60%.


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