New Report Shows Emergency Expenses Are Now Just the Norm

Life has a way of introducing expenses without regard for timing, and household budgets increasingly bear reality in mind. From routine car maintenance to medical bills, unexpected costs have become part of how consumers plan, save and manage cash flow.

According to the January 2026 Paycheck-to-Paycheck Report from PYMNTS Intelligence, “How Paycheck-to-Paycheck Living Turns Small Shocks Into Big Crises,” more than half of U.S. consumers experienced at least one unexpected expense in the past year, and many reported more than one such expense. For most of those consumers, the expense exceeded $1,000, underscoring how even common financial events can influence budgeting decisions across the income spectrum.

How Emergency Expenses Vary Across Households

Emergency expenses are broadly shared, but households experience them in different ways. Consumers living paycheck to paycheck are more likely to encounter smaller, recurring expenses, often tied to routine maintenance or care that cannot be delayed. Higher-income households, retirees and families with children tend to report fewer surprises overall, though the expenses they do face are often larger.

The report also distinguishes between consumers who live paycheck to paycheck by necessity and those who do so by choice. The share of households living paycheck to paycheck out of necessity increased over the past year, reflecting rising living costs and the growing importance of careful budgeting.

Covering Costs Through Liquidity and Planning

When emergency expenses arise, consumers rely on a range of financial tools as part of a budgeting framework. Roughly half use cash or other liquid funds to cover their largest unexpected expense. Others draw on personal loans or revolving credit, reflecting the need for immediate access to funds when timing matters.

Access to liquidity plays a central role in confidence. Nearly half of consumers reported feeling very or extremely confident in their ability to cover a $1,000 unexpected expense without falling behind on other bills. That confidence rises sharply among consumers who are not living paycheck to paycheck, highlighting the value of savings and available credit as part of household planning.

Budgeting, Savings and the Role of Financial Tools

The data point to budgeting as an active process rather than a static exercise. Younger consumers, who are more likely to live paycheck to paycheck, often rely on budgeting tools to monitor spending and prioritize essentials. While these tools do not eliminate emergency expenses, they help households anticipate cash-flow needs and make trade-offs when surprises arise. As share who live paycheck to paycheck due to financial necessity spiked from 29% to 40% year over year, the use of these financial levers can do much to help move those living paycheck to paycheck by necessity toward a relatively surer financial footing.

Emergency savings, even modest balances, also appear to support smoother adjustment. Consumers with access to liquid funds or non-revolving credit are better positioned to manage expenses without disruption, reinforcing the role of savings alongside budgeting.

Taken together, the findings suggest that emergency expenses are shaping how households think about financial preparedness. Rather than outliers, these costs are now a regular consideration. Where budgeting, savings and day-to-day financial decision-making help families weather financial shocks over the longer term.