Content provided by Bankrate.com. New York Post and its content partners earn compensation from the affiliate companies that appear below. This content does not include all available financial offers, and compensation may impact how and where links appear in the content.

Many Americans are woefully unprepared to handle an unexpected expense. Less than half (44%) could afford to pay a $1,000 emergency cost from their savings, according to a recent Bankrate survey. 

This savings shortfall puts many households in a financially precarious situation. Let’s take a closer look at why Americans struggle to save — and advice on building your nest egg in 2024.

Many Americans recognize the importance of having an emergency fund, yet many struggle to actually build one. Inflation may be partly to blame. 

Nearly two-thirds of Americans say inflation and rising prices have caused them to save less for emergencies. If you put more of your paycheck towards necessities like groceries and gas, you’ll have less left over for savings goals.  

“All too many Americans continue to walk on thin ice, financially speaking, with fewer than half indicating they would pay an emergency expense of $1,000 or more from savings,” says Mark Hamrick, senior economic analyst at Bankrate. “Inflation has been a key culprit standing in the way of further progress on the savings front.”

For households living paycheck to paycheck, inflation could force a trade-off between present needs and future preparedness.

While overall wage growth is outpacing inflation, it may not be the reality for all Americans. If your income hasn’t kept up with rising prices, your ballooning monthly expenses leave little room in your budget. 

Existing consumer debt may also be hindering American’s ability to save. Total credit card debt reached a high of $1.08 trillion in the third quarter of 2023. This indicates that more families and individuals are using credit to make ends meet.

There are some reasons to be optimistic. Experts believe inflation will cool slightly in 2024, relieving pressure on Americans’ budgets. Additionally, higher interest rates mean higher returns on savings accounts, which can help boost your emergency fund contributions going forward.

The survey found that two-thirds of Americans worry about covering living expenses in the event of sudden job loss or income disruption.

Lacking adequate emergency savings threatens both short and long-term financial stability. It leaves you more vulnerable during crises or temporary hardship periods. Setting aside at least several months’ worth of necessary expenses helps bridge income gaps. 

Here are other adverse outcomes of not having an emergency fund: 

There’s no one-size-fits-all approach to saving. The goal is to save enough to carry you through financial shock without derailing your other goals. Here’s a step-by-step guide on how to build an emergency fund. 

1. Calculate specific savings goal

Most experts recommend saving between three and six months of essential expenses for an emergency fund. But depending on your situation, you may need to save more. 

If that number sounds daunting, try putting aside $1,000 as a starting point. If you have debt, you may need to balance paying off your bills while saving simultaneously. 

1. Automate your contributions 

Building up your savings requires consistency over time. Automating transfers to your savings account can help you maintain a savings habit and ensure you won’t forget. 

Even small, regular deposits to a separate high-yield savings account add up faster via compounding interest. Focus on setting aside a percentage of your take-home pay — anywhere from 5% to 15% or more — into your savings. 

1. Cut back on your expenses where possible 

It’s wise to reevaluate your expenses and identify areas to cut back. You aim to make feasible lifestyle changes that you can stick to for an extended period of time. This could include eating out less or canceling subscriptions you no longer need. 

If you need extra help, consider using a money-saving app that monitors your spending and suggests ways to cut back. 

1. Boost your income wherever possible 

While not always feasible, increasing your income can help you save money without cutting back on your expenses. Consider taking on side jobs or freelance gigs that generate extra cash to direct straight to savings goals. 

1. Prioritize your savings

Like any goal, building emergency savings involves making conscious trade-offs focusing on future security through short-term sacrifice. Consistently investing in your emergency fund offers protection against financial setbacks. 

Getting serious about savings requires putting your emergency fund first in your monthly budget. Treat your savings the same as a necessary purchase, like housing or groceries. 

Though saving is challenging for many Americans, small changes can make a big difference in your money over time. The most important thing is to be consistent over time — even if you start small. Remember, having an emergency fund can help you handle life’s inevitable emergencies without derailing your financial health. 

Opinions expressed are author’s alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.