If you have been hit with major expenses, whether they are medical, auto or tax-related, you are not alone, according to data released by JPMorgan Chase Institute, showing that just about 40% of families in the U.S have faced these kinds of challenges.
The JPMorgan Chase Institute looked at the financial health of American families, finding that four in ten families have had to make payments of just about $1,500 to cover expenses directly connected to medical issues and services, car repairs or taxes. But that’s not all. Middle income families have also had to deal with an upswing in monthly expenses totaling just about $1,300, for many equaling what they spend on rent or a monthly mortgage payment.
They also found that the data gave them more information on the link between physical health and financial health. “Our integrated, high-frequency data on income, expenses, assets, and liabilities shed new light on the connection between physical health and financial health and the reality that families are not fully insured against the economic consequences of major health events,” added Farrell. “This indicates a need for better products and solutions to help families manage expense volatility and become more financially resilient.”
Dealing with medical costs
The report also discovered that extraordinary medical payments most often happened in the midst of tax season, when a tax refund may give them some more money in the bank. This also went hand-in-hand with a 4% upswing in total income.
Yet they also found that before making a payment on these medical expenses families often had $900 more in liquid assets, but even with that good news they often didn’t fully recover from these financial hits until a year after making the payment. In terms of hard cold cash, a year later savings were down for 48% of families, and when it came to credit 33% carried high credit card debt.
“This could be the most granular look at families’ financial volatility we have ever seen,” said Diana Farrell, President and CEO, JPMorgan Chase Institute. “Even with more money in their pocket from tax refunds, the strain of major and unexpected medical costs are hitting families hard and making it difficult for them to recover.”