Key takeaways:
- 37% of Americans don’t feel financially prepared to handle a major unexpected expense, rising to 46% of Gen Z.
- 78% have had to cover a major unexpected expense in the past 12 months, causing significant stress and anxiety for 33% of millennials and 32% of Gen Z who experienced this.
- 26% could cover essentials for less than one month if they were to lose their main source of income today, while 1 in 5 Gen Z and millennials (20% each) could cover less than two weeks.
September is National Preparedness Month, when Americans are encouraged to prepare for the unexpected. While emergency kits may be stocked, many Americans may be less prepared for an emergency that hits their wallets.
New data from Intuit Credit Karma, conducted by The Harris Poll, finds 78% of Americans faced a major unexpected expense in the past year, and 37% don’t feel financially prepared to handle one today, rising to nearly half (46%) of Gen Z (ages 18-29).
Thin financial cushions leave little room for surprises
When it comes to a lost paycheck, many Americans have very little runway. Roughly a quarter (26%) say that if they lost their main source of income today, they could cover essential expenses for less than one month, a figure that climbs to 39% of Gen Z. Younger Americans are especially vulnerable – one in five Gen Z and millennials (ages 30-45) (20%) could cover less than two weeks.
With little to fall back on, many would turn to credit to cover a sudden bill. If faced with an unexpected $1,000 expense tomorrow, 28% of Americans say they would most likely cover it with a credit card.
Financial preparedness also varies by generation. While 37% of Americans overall don’t feel prepared for a major unexpected expense, that rises to 46% of Gen Z and falls to 26% of Boomers, highlighting a sizable preparedness gap between generations.
Surprise costs are challenging financial preparedness
Most Americans have already had their financial preparedness put to the test this year. More than three in four (78%) experienced a major unexpected expense in the past 12 months, most commonly vehicle repairs (37%), home repairs (31%) and medical bills (28%). More than a quarter of those who experienced this (27%) say the expense caused significant stress and anxiety, including 32% of Gen Z and 33% of millennials.
Younger Americans who experienced a major unexpected expense felt the fallout especially hard. Among millennials, 22% had to cut back on essentials like groceries, gas and utilities, and for 17%, the expense caused tension in a relationship. For Gen Z, the strain often meant tapping multiple resources: 22% drained most of their savings, 21% picked up extra work or a side gig, 20% borrowed money from friends or family and 13% took out a loan.
Rising costs make it harder to prepare
More than 2 in 5 Americans (42%) point to the rising cost of everyday expenses as a reason it is hard for them to be more financially prepared for a major unexpected expense.
Beyond cost of living, generations point to the financial challenges most relevant to them today:
- 32% of Gen Z and millennials say their income isn’t high enough
- 28% of millennials point to housing costs like rent or a mortgage
- 25% of millennials cite credit card debt
- 20% of Gen Z say their income is unpredictable or irregular
- 19% of Gen X (ages 46-61) name medical or healthcare costs
- 16% of Gen Z say they don’t know where to start
Financial check-ins are often reactive
Being prepared starts with regularly checking in on your finances, but for many Americans that habit is inconsistent. The most common prompts Americans use to take stock are a regular routine they’ve set for themselves (47%), the start of a new month (25%) and receiving an unexpected bill (21%).
For Gen Z, the triggers are often reactive. Nearly a quarter say they check in when they experience a change in income or employment (24%) or receive a low-balance alert from their bank (23%). Among Gen Z and millennials, 20% take stock ahead of a big upcoming expense or event, such as a vacation or major purchase.
Americans are preparing for tax season, but gaps remain
For many Americans, tax prep follows a standard schedule. More than a quarter (27%) say they start preparing – whether gathering documents or lining up a preparer – as soon as the new year begins, and 26% of Gen Z start a few months before the April 15th deadline.
Younger adults may still be getting comfortable with how paycheck deductions work. Nearly a quarter of employed Gen Z (23%) say they cannot make sense of the money withheld from their paychecks.
The 2025 tax year also introduced new provisions, including temporary tax breaks tied to tips, overtime, and auto loan interest, but awareness and action are still catching up. About a quarter of employed Americans (24%) say they have adjusted their paycheck withholding in response, including 26% of employed Gen Z and 30% of employed millennials, and another 21% plan to. Some younger adults didn’t realize it was an option: 13% of employed Gen Z and 12% of employed millennials say they weren’t aware they could or should adjust their withholding.
Looking ahead to their upcoming tax filing, here’s what Americans have already done, or intend to do by the end of 2026:
- Start organizing their documents – 32%
- Use tax software or an online tool – 23%
- Consult a tax professional – 21%
- Track deductible expenses or receipts – 20%
- Contribute to a retirement account, such as an IRA or 401(k) – 20%
- Adjust their paycheck withholding to reduce their tax bill – 13%
- Make estimated quarterly payments – 13%
- Contribute to an HSA or FSA to reduce their tax bill – 9%, rising to 15% of Gen Z and 13% of millennials
“Most Americans have already faced a financial emergency this year,” said Courtney Alev, consumer financial advocate at Intuit Credit Karma. “Younger adults, especially, don’t feel ready for the next surprise expense, and have little cushion to fall back on, which often means leaning on credit or dipping into savings to get by. The good news is that preparedness isn’t an all or nothing endeavor. Even little steps like getting a clear picture of where your money is going, setting aside a small amount toward an emergency fund, and checking in on your finances before a bill forces you to, can make the next unexpected expense more manageable.”
“Unlike in 2025, the 2026 federal withholding tables were updated to reflect provisions made permanent under the Tax Cuts and Jobs Act, so you may see a little more in each paycheck and a smaller refund or higher balance due than last year,” said Lisa Greene-Lewis CPA and tax expert with TurboTax and Credit Karma. “Life changes and new deductions, like the one for tips under the One Big Beautiful Bill, are a good reason to revisit your withholding. Now is a great time to check in, and to look at any moves you can make before December 31.”
Survey Method
This survey was conducted online within the United States by The Harris Poll on behalf of Credit Karma from September 1-2, 2026, among 2,017 adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.7 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact pr@creditkarma.com.