How Each Generation’s Emergency Savings Habits Differ
Written by
Emily Fowler
Edited by
Amber Barkley
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Many Americans aren’t financially prepared for the unexpected. According to a recent Empower study, 21% have no emergency savings at all and nearly 40% couldn’t cover a $400 emergency. Inflation, debt and rising expenses make saving harder, but generational differences in priorities and financial realities also play a role.
Baby Boomers
Boomers have the strongest financial safety nets. With a median emergency savings of $1,000, they’re the most likely to have funds set aside for job loss, home repairs or medical expenses.
More than half contributed to their emergency fund in the past year, and they’re the least likely to rely on credit cards for unexpected costs.
Many have already paid off major debts, which helps, but they’re also the generation most likely to play it safe. Only 26% put their money into high-yield savings accounts, with many opting for cash reserves instead.
Gen X
Their median emergency fund is $868, but between mortgage payments, kids’ college tuition and trying to save for retirement, they find it harder than boomers to add to their savings. While 44% managed to add to their emergency fund in the past year, that’s over half who haven’t contributed in over a year.
Gen Xers are similar to boomers in preferring cash savings over high-yield accounts, despite the potential for better returns.
Millennials
Millennials’ median emergency fund is only $500, and 60% don’t know how they’d cover an unexpected bill, thanks a combination of student loan repayments, high rent and rising costs.
Many put money away when they can, rather than following a set plan. Unlike older generations, however, they’re more likely to seek financial advice, with 32% working with an advisor to set savings goals.
They also favor keeping their savings in high-yield savings accounts over cash, to make their money stretch further.
Gen Z
With a median emergency fund of just $200, Gen Z is the generation with the smallest financial cushion, though as many are still in high school or college, it’s not that surprising.
Even those who have left school will probably still be early in their careers, dealing with lower salaries along with rising costs. More than half feel stressed about not having enough saved, yet 31% have sought professional financial guidance.
They also lean toward high-yield savings accounts, hoping to build their funds more efficiently over time.
Building a Stronger Safety Net
It’s not all bad news for younger generations. According to the St. Louis Fed’s Institute for Economic Equity, younger Americans — millennials and Gen Z — have more wealth on average than Gen Xers and boomers did at the same age, with millennials and Gen Z owning $1.33 for every $1 of wealth owned by Gen Xers and $1.32 for every $1 owned by boomers at similar stages of life.
Emergency savings habits, though shaped by generational experiences, economic conditions and shifting priorities, can change with the right financial education and strategic planning.
More From GOBankingRates
