The overall share of adults who would cover a small emergency expense using cash or its equivalent increased to the highest level since 2013, when the survey began. When faced with a hypothetical expense of $400, 68 percent of all adults in 2021 said they would have covered it exclusively using cash, savings, or a credit card paid off at the next statement (referred to, altogether, as "cash or its equivalent").35 The remainder said they would have paid by borrowing or selling something, or said they would not have been able to cover the expense.

 

Like the results for overall financial well-being, parents saw a sharp increase in the share who would cover a $400 expense with cash or its equivalent—up from 56 percent in 2020 to 64 percent in 2021. Those not living with their own children under age 18 saw a smaller increase of 3 percentage points. One reason that parents experienced this sharp increase may be the expansion of the CTC. The most common way parents used their CTC payments was saving them, potentially improving their ability to handle unexpected expenses.36

Those who would not have covered a $400 expense completely with cash or its equivalent (32 percent of adults) may have found it more difficult to handle small, unexpected expenses. For these adults, the most common approach was to use a credit card and then carry a balance, although many indicated they would use multiple approaches (figure 20). Eleven percent of all adults said they would be unable to pay the expense by any means, similar to the 12 percent seen in 2020.

Figure 20. Other ways individuals would cover a $400 emergency expense
Figure 20. Other ways individuals would cover a $400 emergency expense

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Note: Among all adults. Respondents could select multiple answers.

To understand more about covering household expenses, the survey asked about adults' ability to pay their monthly bills. As of October and November 2021, 24 percent of adults indicated that they had, or were close to having, difficulty paying bills for that month: 14 percent of adults had one or more bills that they were unable to pay in full, and an additional 10 percent said they would have been unable to pay their bills if faced with a $400 expense. The 24 percent having difficulty (or close to having difficulty) paying bills was down 3 percentage points from 2020 and down 4 percentage points from 2019. These declines are consistent with improvements seen in overall financial well-being.37 

The share who would pay using cash or its equivalent was up 4 percentage points from 2020 and was at the highest level since the survey began in 2013 (figure 19). This increase is consistent with the results on overall financial well-being and may reflect improving economic conditions and the additional COVID-19 relief measures enacted in 2021.

Figure 19. Would cover a $400 emergency expense completely using cash or its equivalent (by year)
Figure 19. Would cover $400 emergency expense completely using cash or its equivalent (by year)

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Note: Among all adults.

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