A troubling financial reality is unfolding across the United States, as studies show that young Americans are falling behind in saving at an alarming rate.
Despite conventional wisdom urging individuals to set aside three to six months’ worth of expenses for emergencies, more than one in five Americans have no savings at all. For many, even a modest unexpected expense could throw their finances into disarray.
A recent study by financial services company Empower reveals that 37 percent of Americans couldn’t afford an emergency expense over $400.
The median emergency savings balance sits at just $600—far from what financial experts recommend for weathering job loss, medical bills, or unexpected home or car repairs.
Younger generations are in an even more precarious position, with Millennials having a median savings of $500 and Gen Zers a shockingly low $200.
This financial shortfall isn’t just a matter of choice; economic pressures, soaring inflation, and rising living costs are making it increasingly difficult for young Americans to put money away for a rainy day.
More than three in five Americans consider having emergency savings a priority, but with inflation eating into wages and the cost of living climbing higher, saving has become an uphill battle.
Fifty-seven percent of Americans say they’ve been unable to contribute to their emergency fund due to high prices.
Forty-seven percent say their monthly expenses are simply too high to set aside extra cash.
In the past year alone, one in four Americans has had to dip into emergency savings just to cover basic living expenses.
Beyond immediate emergencies, experts warn that this savings crisis extends to long-term financial health.
A separate Morning Consult study found that Gen Z adults allocate 23 percent of their income to discretionary spending, with 61 percent admitting to frequent overshopping.
While financial struggles are real, there’s also a growing concern that some young Americans aren’t prioritizing saving over spending.
The rise of digital transactions and effortless mobile payments has made it easier than ever to part with money, making disciplined saving all the more difficult.
As Thomas Rudzewick, president of Maspeth Federal Savings, noted, “The problem is that young people today have so many opportunities to spend money because their phone is the banking transaction center.”
This lack of financial discipline isn’t just affecting emergency savings—it’s creating a retirement crisis in the making.
A year-end YouGov poll revealed that more than 60 percent of Gen Z and Millennials either have no retirement savings or have saved less than $5,000.
With Social Security facing an uncertain future and personal responsibility for retirement savings becoming more critical, the failure to start early could have devastating consequences.
Financial experts warn that without a shift in mindset and stronger financial literacy, many young Americans could find themselves unprepared for the future.
Some organizations are pushing for greater financial education, but whether that will be enough to change saving habits remains to be seen.
As financial analyst William Hubbard put it, “It’s impossible to save enough, so they don’t start.” If younger generations don’t take saving seriously—whether for emergencies or retirement—they may be setting themselves up for a future where financial independence is out of reach.