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Nearly Half of U.S. Adults Lack Adequate Savings

By Alan Kopit, Attorney

A penny saved is a penny earned - but according to that adage many U.S. adults are not earning all that much.

That's because almost one-half of all U.S. adults (45%) say their household does not have enough money in liquid savings to cover at least three months of living expenses, according to a new survey conducted by Harris Interactive® and commissioned by LexisNexis Martindale-Hubbell's, the most comprehensive and trustworthy online resource for finding a lawyer.

Moreover, about one in ten adults (9%) say their household does not have any money in liquid savings, defined as any savings readily available as cash and not intended for long-term investment. And 13% say they generally save none of their monthly household income in liquid accounts.

Among those earning less than $35,000, the numbers are more striking. Nearly one in five (19%) does not currently have any money in liquid savings, compared to 4% of those earning $35,000 or more.

"Three to six months" worth of savings for living expenses is the minimum every household should have, no matter its income," said Alan Kopit, legal editor of "Any less can leave people vulnerable to serious financial woes if they hit unexpected difficulties, like a job loss or medical problem. It's a good habit for all working people to put away a reasonable portion of their take-home pay into some form of liquid savings."

Single adults are particularly less likely to have money in liquid savings, the survey found. "It's easy for young or single people to feel like they do not need to maintain any savings, because they may not have the financial responsibilities that come with having a family," said Kopit. "In fact, they may be the most in need of savings, because they may not have an immediate family member to take care of them financially in an emergency."

Over the long term, inadequate savings can leave consumers at risk of bankruptcy. "With recent reforms in U.S. bankruptcy law making it more difficult than ever to erase debt, it's important to protect yourself," Kopit said. "If you face financial challenges, seek the advice of a lawyer or professional financial advisor to explore alternatives." "Rainy Day" Biggest Savings Motivator

The most common reason adults who save say they do so is to have a "rainy day" fund for unexpected emergencies. Seventy-three percent cited that as their motivation, compared to just forty-seven percent who cited the need to cover living expenses in case of a loss of income.

Nearly three in ten adults who have liquid savings (29%) are saving for a vacation, the survey found. And fifteen percent are doing so to fund a special event, such as a wedding or birthday party.

"There's no wrong reason to save money, but it's a good idea to think about the basics initially," said Kopit. "First create a fund to cover living expenses if you're left without income for period of time. Once you have that established, you can start putting away money with other things in mind, like a vacation or a new car purchase."

Despite their good intentions with savings, some people are in fact using their savings for everyday expenses. Among those who have liquid savings, more than one in four (27%) say their last savings withdrawal of over $100 was to cover normal living expenses, and sixteen percent used it to pay off debt.

"Regularly using liquid savings to cover normal expenses may indicate you are not planning properly," said Kopit. "If you find yourself doing that, you should reassess your overall budget strategy."

Additional Survey Findings

  • Savings accounts top of the list of ways people keep their liquid savings. One-half (50%) of all adults say they keep their household's liquid savings there. The second most popular method, Certificate of Deposit, was maintained by only fifteen percent of adults.
  • Adults in the Midwest are more than twice as likely as their Northeastern counterparts to save money in a liquid account for a car purchase (17% vs. 8%).

Alan Kopit is the legal editor of and partner at the Cleveland-based law firm Hahn Loeser & Parks LLP. He has contributed columns to, focusing on consumer and small business legal issues and his media appearances include MSNBC, CNBC, CNNfn, Bloomberg Television, WEWS-TV Cleveland (ABC), WKYC-TV Cleveland (NBC), WKBC-TV Houston (NBC), Bloomberg Radio, and legal contributor to NBC-TV's Today show. For more information about Alan Kopit, please see his biography.

Harris Interactive® fielded the online survey on behalf of LexisNexis Martindale-Hubbell's between February 17 and February 21, 2006 among a nationwide sample of 2,318 U.S. adults 18 years of age or older, of whom, 1,578 have liquid savings. The data were weighted to be representative of the total U.S. adult population on the basis of region, age within gender, education, household income, race/ethnicity and propensity to be online. In theory, with a probability sample of this size, one can say with 95 percent certainty that the results for the overall sample of adults have a sampling error of plus or minus 3.1 percentage points. The sampling error for those who have liquid savings is plus or minus 3.8 percentage points. This online sample is not a probability sample.

LexisNexis Martindale-Hubbell's is the leading lawyer directory on the Web, providing access to more than 440,000 attorneys and law firms nationwide. More than one million searches per month are conducted at by consumers and business people in search of the right lawyer for their needs.

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