As of 2019, the typical Black or Hispanic family has up to $2,000 in liquid savings, the typical White family has more than four times that amount.
https://www.bankrate.com/banking/savings/financial-security-0118/ is a 2018 article, quoted in CNBC. ( https://www.cnbc.com/2022/01/19/56percent-of-americans-cant-cover-a-1000-emergency-expense-with-savings.html is a 2022 update) Bankrate.com conducts numerous surveys every year. I decide to believe in this survey. The question posed:
Q: How would you deal with a major expected expense, such as $1000 for an emergency room visit or car repair? Each respondent can only choose one option below
- 39% would pay the whole bill from savings…. Personally, I think some of the other 61% may have $1k savings but somehow would not fork out this amount, so they chose other options
- 19% would pay with a credit card … (high interest) and finance the balance over time
- 12% would borrow from family or friends
- 5% would use a personal loan.
- 13% would count on reducing spending from other parts of their budget. I believe this option means “use some combination of the above, without increasing aggregate debt level”
- 6% would resort to something else and 6% simply don’t know or refused
Lower wage earners, those making less than $30,000 a year, were twice as likely to use some form of borrowing than savings, while households making more than $50,000 were more apt to use cash.
This result dovetails with a recent Federal Reserve report that found 44 percent of Americans couldn’t cover a $400 emergency expense out of their pocket.
19% of Americans also report that they have $0 set aside to cover an unexpected financial emergency, according to another survey.
— an exemplary saver featured at the end of the article:
Timothy Wiedman had around $25,000 in his emergency fund in September 2016 when he slipped on wet grass in poor visibility, and ended up in the hospital. The recently retired Doane University associate professor shelled out around $1,700. He was able to cover the hospital bills out of savings rather easily. Amassing such a large cache (25k) is no easy feat, especially as health care and college costs rise dramatically.
Personally, I will be targeting a similar amount of liquid cash reserve.
— Now I have more appreciation that large portions of the American families can’t afford the expensive colleges, even though colleges provide financial aid to ensure every admitted student can afford it. Many of the struggling families would not be able to support their kids adequately during the 12 years before college
Luxury education, big homes are priced out of reach for more than half the population.
— https://www.brookings.edu/blog/up-front/2020/12/08/the-black-white-wealth-gap-left-black-households-more-vulnerable/
Average value of liquid assets among white households was $8,100 in 2019 compared to $1,500 for Black households. (Does the negative data points go into the “average”?)
Furthermore, 72 percent of white households say they could get $3,000 from family or friends compared to 41 percent of Black households.