The study, conducted by Bankrate.com, found that 76 percent of citizens had less than six months’ worth of savings to their name. Half of Americans had less than three months emergency savings and more than a quarter had no savings at all.
Were they to lose their job or face a financial emergency, these savings would not be enough to keep them afloat.
There are many reasons why so many Americans are in a precarious financial situation. The average worker currently earns 273 times less than the average CEO. Median household income actually declined over the last decade from more than $53,000 in 2000 to under $49,500 in 2010 (all in 2010 dollars). Income inequality has grown immensely, as the share of income earned by the middle class fell from 62 percent in 1970 to a record low of just 45 percent in 2010.
Meanwhile, as lower- and middle-class pay has dropped, the cost of living has grown immensely. In the past 40 years, college tuition grew between 80-113 percent, the price of a home nearly doubled, health care costs went up 50 percent, and the price of gas went up nearly 20 percent.
The combination of low wages and higher a cost of living has made it much harder for Americans to create and sustain their own rainy day funds. As a result, the vast majority of find themselves in financially precarious situations, relying on each subsequent paycheck to pay off the bills.