Can You Get $1,000 In An Emergency?

If the answer to that question is ‘yes,’ you enjoy more economic security than 64% of the population in the United States. The National Foundation for Credit Counseling is worried, and understandably so, by the fact that two thirds of the population does not have ready access to $1,000 to cover emergency expenses. Others would have to turn to credit card cash advances, borrowing, and other dire means. $1,000 is not that much money; it’s easy to spend that much on basic car repairs or medical expenses, after all.

This ties into larger concerns about the growing credit culture in the United States. People are told to set aside money for a rainy day, but they are not provided with the means to do so, and then dire studies about it get released and everyone acts shocked, simply shocked, by this news. This despite the fact that there’s ample documentation on the issues facing low income people in the United States, particularly people of colour, who have a very low net worth on average, and disabled people, who cannot have cash on hand if they want to maintain their benefits. When wealth concentrates, as it is doing right now, in the hands of a few, that money has to come from somewhere.

To save money, you have to make money. This, the ability to make money, to keep making money, is not a universal—certainly not now and often not before. People making minimum wage usually don’t actually make enough money to support themselves, let alone set funds aside. Those who live paycheque to paycheque do so literally, down to the very last dime on each check. They are in a state of extreme fragility; if the price of a bag of rice suddenly goes up, they are against the wall, because they’ve budgeting that tightly. If the electric company decides to increase the cost of service by two cents, they’re facing a suddenly ‘huge’ electric bill; it might only be a few dollars more expensive than usual, but that’s enough.

So the idea that people would be able to put money aside, in these circumstances, is rather ludicrous. People cannot save money when all their money is spent before they even get it. When they’re already borrowing to cover their expenses and bills are mounting up. People who are behind on their payments usually do not have money to spare for putting in a savings account. Not even $10 a month, some token amount they can use to build up a savings to cover an emergency, or an expense like the deposit on a new apartment. They may be well aware of how compound interest works and how it would be a good idea to save now to have money later, or they may not; either way, they have nothing to save.

It’s not surprising that 64% of people in the United States don’t have ready access to $1,000 in cash, but it is disturbing, and indicative of the class problems this country faces. So much of the rhetoric around class, access to funds, financial planning, is just completely irrelevant to a huge percentage of the population. People don’t need investment advice when they don’t even have savings accounts. People without bank accounts probably aren’t going to get much out of suggestions that revolve around banking more wisely.

These are the realities that community organisations face in their work with people in the lower classes. Shelters, for example, know that their clients have no money to get established after leaving abusive relationships or being kicked out of their homes. Not ‘no money’ in the sense of not having very much money, or preferring to wait for the next paycheque to have a little more breathing room, but no money as in the cash in their wallets is all they have access to, unless they want to borrow. And many of their friends and family are in the same situation, which means that their borrowing alternatives are limited to commercial sources, rather than private loans.

Except that banks and credit card companies are suspicious of people who do not have bank accounts, who have limited assets, and have no credit history. They are poor financial risks because not enough is known about them and if they’re borrowing money, they obviously don’t have money. Which forces people into the hands of short-term lenders who charge exorbitant and abusive rates for loans that can come with hidden and very unpleasant terms. These are the kinds of issues that social workers and people providing services in their communities need to think about. If a problem involves money, it may be very difficult to solve, because their clients have nothing.

$1,000 may seem like a lot of money or very little, depending on class and circumstances. With the prices for everything on the rise, though, it’s certainly true that this amount can go very, very fast. And emergencies tend to snowball and create more emergencies. The employee who misses work to go to the doctor loses a day’s wages and has to pay the doctor. Risks losing a job, too, especially if the doctor wants a followup. Without a job the person cannot make the rent, and the savings that might have paid the rent, if they existed, already went to paying the doctor. Et voila, welcome to Desperation Street. It’s one way so you’ll have to back out. If you can.

That $1,000 may be all that stands between some people and desperation, truly dire, dangerous, and frightening circumstances. $1,000 or more might be casually spent at an expensed lunch served by someone who doesn’t even have a bank account.