If your basement floods or your car breaks down, you may not have enough money to cover the bill. Especially if you’re a millennial. 60 percent of millennials don’t have enough money to cover a $1,000 emergency.
A new survey from LendingTree finds that 6 out of 10 millennials (which LendingTree classifies as those aged 22 to 37) say they don’t have enough put away to handle a $1,000 emergency expense, meaning they would have to raise the funds by borrowing them, putting them on a credit card, or by selling something. The survey, conducted earlier this month, asked 1,000 U.S. adults about their savings level.
Over half of Americans, 52 percent, say they couldn’t do it either. Baby boomers (ages 54-72) fare the best, with about 60 percent saying they could handle a $1,000 emergency by using cash or savings. Gen-Xers (ages 38-53) are only slightly better off than millennials, with about 48 percent saying they’d be OK.
A rule of thumb for young people and newly married couples (but works for just about anyone) is the 10-20-70 rule. Be generous with 10% of your income, save 20% of your income, and live on 70% of your income, and most importantly, try to stay out of non-mortgage debt. And, if you do buy a home, make sure you have 20% for a down payment, and keep your payments under 25% of your take-home pay. Health and discretionary income are two important factors for both your mental and financial well-being.