A recent study found that the median cost of an ER visit is $740. No one likes thinking about it, but if you had a surprise $500 medical bill that you had to pay tomorrow, could you afford it? Even if you could, how would it make you feel? If you said anxious, you’re not alone.
J.G. Wentworth worked with YouGov, an international data and analytics group, to ask American adults questions about their financial security and anxiety. The results were surprising. When asked how they would feel if they received an unexpected bill for $500, more than half (53%) said that they would experience at least some anxiety thinking about how they’d pay for it. Age appeared to be one factor that influences financial anxiety.
Three out of five (62%) millennials said that they would worry about finding the money to pay for an unexpected $500 bill, compared to two out of five (54%) of those in Generation X. The survey found that millennials were also more likely to report that the unexpected bill of $500 could cause “extremely high” anxiety (33%) than Generation X (28%) participants. While the survey found that Baby Boomers tended to have more cash available, two in five (43% ) still reported that an unexpected bill would give them anxiety, with more than one in five (25%) saying it would cause extremely high anxiety.
These results may seem shocking, but they line up with other studies that show many Americans are not prepared to handle unexpected financial emergencies.
Americans Are Unprepared For The Unexpected
The Federal Reserve’s 2016 Economic Well-Being Survey (PDF) found that 46% of Americans would have to borrow cash or sell something they owned in order to afford an unexpected bill of $400 or more. How common are these unexpected costs? More common than you think. One often unplanned expense is medical bills.
The Federal Reserve’s survey found that more than one in five (22%) of respondents reported having unplanned medical costs that they had to pay for out of pocket. Of those, nearly half (46%) said that they still had debt from the expense when they answered the survey. While the Federal Reserve reported that the number of people with unexpected medical costs or medical debt improved slightly from 2013, many indicate that they’re still unprepared if they receive an unexpected bill.
Savings Gives Americans Peace of Mind.
Perhaps unsurprisingly, the research showed that the more money someone had in liquid capital, such as their bank account, the less likely they were to be anxious about unplanned bills. Among adults who reported less than $500 in liquid capital, nearly eight out of ten (79%) said that they would experience extremely high anxiety finding funds to pay a $500 bill. This isn’t startling as it could mean draining their bank accounts and still not having enough. Conversely, six out of ten (60%) people who reported having more than $10,000 in liquid capital said that they’d have no anxiety about paying an unexpected bill.
The Financial Future Looks Bright
The good news for people who tend to worry about things like unexpected bills, is that the future seems to look bright. The survey asked the same respondents how comfortable they would feel paying off that same bill if they incurred it five years in the future. Only 17% of respondents said that they weren’t confident they could afford that bill in five years. Even millennials were optimistic about their financial future, with eight in ten (80%) saying they were confident they could raise the money they needed.
While this research & Federal Reserve surveys show that financial anxiety is still a reality for many Americans, both show that, for many, that anxiety is starting to become more manageable.
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2281 adults. Fieldwork was undertaken between May 3rd - 4th, 2017. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).
J.G. Wentworth does not offer legal, tax, or financial advice. Please contact independent professionals for those services