Research shows millions of Americans have won billions of people in medical debt
A West Health-Gallup Healthcare Survey showed that 31 million Americans accumulated $74 billion in medical debt in 2024.
According to a new report from Investopedia, the average American family in 2025 should save at least $35,000 in emergency savings. And the person continues to rise.
That tab represents the six-month emergency cost of a typical American household, about two-fifths of the household’s annual income.
Many financial experts recommend that families need to accumulate sufficient, if not more, emergency savings for three to six months. The Emergency Fund is intended to protect you from unemployment, health crisis, car breakdowns, or major home repairs. Emergency savings will become particularly important during the recession, and Americans may face in the coming months.
Last year, Investopedia was to price six months of emergency costs, including housing, medical care, travel and food. In 2024, the total amounted to just over $33,000.
With the 2025 update released in May, Investopedia once again ran the numbers. This time they’ve reached $35,218.
“It’s about 5% jump,” says Caleb Silver, editor of Investopedia. “The biggest factor is healthcare. These costs are rising more than inflation.”
The analysis examined the costs of paying for six months for housing, utility, food, medical and automobiles for at least two households.
This is the fault:
$11,635 for shildical healthcare: Average cost of a single coverage Cobra premium for six months multiplied by the average household size.
$10,621 for a car vehicle: the average cost of owning two vehicles and operating one for six months.
$9,785 for housing housing and utilities: Average cost of homes and utilities for tenants and homeowners over six months.
$3,176 for hood food: average cost of groceries for six months.
Most Americans don’t lie 35,000 dollars
Most American households do not lie with such cash. According to the Federal Reserve, the $35,000 figure is four times the balance of four times the consolidated checking and savings accounts for American households.
At least one in five Americans do not have an emergency savings account, according to a March survey by personal finance site Wallethub. Wallethub CEO Odysseas Papadimitriou has found that he has that statistical vigilance.
“Emergency savings are the number one priority for every household and should be prioritized above everything else,” he said. Without it, “You are completely exposed to a financial disaster.”
Investopedia Silver agrees.
“If you don’t have an emergency savings account, you have to go against the emergency and pay the debts to pay those bills, then you start a debt cycle that’s very difficult to leave,” he said.
Investopedia essentially described six months of household expenses as an exercise to show that it was very large.
“We’re doing it to ensure that people have realistic ideas about how much your actual needs will cost if you lose your income and your income to help your home with your healthcare,” Silver said.
Still, as we said, most American families don’t have emergency savings to cover the six-month expenses.
Emergency savings are better than nothing
The good news is: Even a small emergency savings account is better than nothing.
Emergency savings make it easier for consumers. A study released by Vanguard in April found that savings of at least $2,000 in emergency savings increases financial well-being by 21%, compared to no emergency funds. People who lack emergency savings are more likely to report financial stress.
A $500 emergency fund could cover repairs or modest medical costs for small vehicles. A $2,000 fund can see you through larger car repairs or appliance replacements. For $10,000, you can cover a wider range of household emergency situations.
“The cost of 3-6 months may be a goal that some people find a bit unattainable,” said Sam Taube, chief investment writer at Nerdwallet.
On a more modest goal, Taube said, “Just taking a round number, there’s a benefit to aiming for that.”
Nerdwallet offers emergency fund calculators. This will help you start savings.
Below are some tips on emergency savings from Nerdwallet, Investopedia and other sources.
Put your emergency funds in a high-yield account
In the current interest rate environment, it is not difficult to find an annual revenue of more than 4% in an emergency savings account, as long as you know where to look.
One option is a high-yield savings account. The best rates tend to come from online banks with relatively low overhead and are competing for your business.
Another option: Money Market Account. It combines the functions of a check account and a savings account. Although there may be high balancing requirements, the competitive rate is often 4%.
Please make sure your emergency funds don’t arrive easily
Opening an emergency savings account at a daily bank is fascinating. But the convenience “can be a double-edged sword,” Taub said.
He says the better idea is to “go through the step of opening another account with another financial institution somewhere,” and to avoid worrying about emergency savings. This will reduce the chances of raiding your account.
Consider automatic deposits
Opening up emergency funds and making more or less random donations may be a challenge to build savings.
Auto contributions help you accumulate savings in an orderly manner. Employers can deposit a portion of their salary directly into an emergency savings account. You can also set up your own automatic forwarding.
As Taube points out, just $10 a week will be over $500 a year later.
