The fragility of household finances around the world is exposed in an academic paper that suggested half of people in the United States, United Kingdom and Germany could not come up with $2,000 in a month.
Using figures from the 2009 TNS Global Economic Crisis survey, the research from public policy organisation Brookings Institution says a "sizable fraction of seemingly 'middle class' Americans judge themselves to be financially fragile". It highlights the importance of emergency savings. The research shows asking family and friends for help is among the most popular means of getting money in an emergency.
Italians have highest "coping capacity"
Asked if they could come up with $2,000 in 30 days, half of the US study respondents said they would have difficulty. The proportion was described as "disturbingly high". A similar dollar amount to represent a significant - but not unusual - cost was used to gather figures from Canada, the United Kingdom and five other European countries.
Results showed only 20% of Italian respondents would have difficultly raising the funds. In comparison, 27% of those surveyed in the Netherlands and Canada would have trouble, 37% in France, 46% in Portugal, 50% the US, 51% in Germany and 52% in the UK.
I'll use my savings, then ask family and friends
The most popular method to get $2,000 in 30 days was to use savings - common across every country. Savings was a particularly popular method in Italy and the Netherlands. Researchers write that asking family or friends for the money was typically the second most common method, followed by mainstream credit, then working more and then selling possessions.
The rich can have fragile finances too
Researchers said of the US results that "it seems somewhat unbelievable that the nearly a quarter of households making between $100,000 and $150,000 claim not to be able to raise $2,000 in a month". It echoes the message in the eZonomics video Why the rich need to budget as well. The study findings highlight the importance of building an emergency fund to meet unexpected costs.
The video tutorial How much should I be saving? outlines how to set up a personal budget and build an emergency fund.