This paper examines the financial fragility of Dutch households by
assessing their ability to raise €2000 within a month in the event of a
financial emergency. We show that one in seven Dutch households was
financially fragile well before the start of the pandemic and resulting
slow‐down of the economy. The most fragile groups were the young, households
with children, and those with lower education and income levels. While most
households relied on their savings to cope with a financial emergency, other
coping methods include seeking help from family and friends or credit card
borrowing. Further, our findings show that financial and probability literacy
are associated with financial fragility and the chosen methods to cope with a
financial emergency. These findings emphasize the importance of financial
knowledge and numerical ability for financial decision‐making. The results of
this study can be used to design targeted policies and financial education
initiatives.
