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Nearly Half of Americans Living Paycheck to Paycheck

Report finds 44 percent of people in U.S. have less than three months' worth of savings, leaving them one emergency away from disaster

Sarah Lazare, staff writer

Nearly half of all people in the United States face "persistent financial insecurity" and are forced to live paycheck to paycheck without the savings necessary to weather them through life problems that can be unavoidable — like a medical emergency or a broken car.

So finds the 2014 Assets and Opportunities Scorecard released Thursday by the Corporation for Enterprise Development. According to the report, 44 percent of people in the United States live in "liquid asset poverty," which means they own less than three months' worth of savings ($5,887 for a family of four).

Without a safety net, a liquid asset poor family must borrow to deal with unforeseen financial emergencies. "For the 56% of consumers who have sub-prime credit scores, the only option may be to take out a high-cost—often predatory—loan, which can create a cycle of debt and worsen financial insecurity," the report notes.

People with low incomes and people of color are disproportionately liquid asset poor, with two of every three households of color and four out of five of the lowest-income households (making less than $18,193) falling into this category, according to the report. Furthermore, liquid asset poverty hits the U.S. south the hardest, the study finds.

Yet the problem, which the study says is stuck at high levels, does not spare the so-called middle class. A quarter of all middle class homes have less than three months of savings.

Yet, previous research suggests the CFED report might be an under-count. A survey this summer by Bankrate.com found that less than one in four Americans has enough money saved to cover six months' worth of expenses.

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