Many Americans are living so close to the edge each month that they are one emergency away from financial ruin. If the unexpected happened, would you have difficulty coming up with an extra hundred dollars?

If you had an unexpected emergency, could you come up with $1,000? How about $500? Do you have money saved for emergencies, or would you find yourself eating Ramen noodles for a month? It’s surprising how many people are barely getting by. Why are many Americans one emergency away from financial ruin?

Almost Half of Americans Would Have to Borrow

One of the first steps in creating a successful financial plan is establishing an emergency fund. You’d be stunned at how many Americans would have difficulty rounding up a few hundred dollars.

Since 2013, the Federal Reserve Board has conducted surveys to monitor the financial and economic status of Americans. A recent one found that 47% said they’d have to borrow or sell something to cover a $400 emergency.

Financial advisor discussing with couple

Is There No Money to Save?

I know you’re thinking that 47% represents the low income or no income. Think again. It’s retirees; members of the lower, middle, and upper classes; and college and high school graduates. The 47% covers the entire spectrum and includes many groups that you wouldn’t expect.

Economists used to think that consumers went through seasons of good and bad financial times. Sometimes they borrowed money and other times they saved.

But, today’s statistics are forcing them to think again.

Why is there such a significant decline in savings? Could it be that there’s no money to save? Or, are nearly half of all Americans living that close to the edge?

Why Can’t We Live within Our Means?

At certain income levels, there may not be any money to save. But when you’re making $100k+ per year and $400 is outside of your reach, you have to wonder:

Where does the money go and why are so many of us in the same predicament?

There are people who clearly live well above their means, while others have made poor financial decisions. But, there are many who fall outside of these categories.

Some people claim the reason is wage stagnation. Americans can’t make enough money to get ahead.

Here’s an example. The highest category of spending is housing and education – even above credit card debt. Parents will spend their last dollar to give their children a quality education.

Shocked and worried young woman looking at credit card.

Areas where you can find the best schools can command higher housing costs and higher taxes. What’s left to save when you’ve used every last dollar to buy into a neighborhood at the top of your price range?

It’s crazy, but it’s also one reason why $400 is the financial tipping point for 47% of Americans.

Start an Emergency Fund

Setting aside a few dollars a week can help build a solid emergency fund. It only takes one unexpected event to lead you into financial ruin. It’s important to start protecting your future now. Take that first step, and you’ll avoid joining that 47%.


Neal Gabler. “The Secret Shame of Middle-class Americans.” The Atlantic magazine. May 2016 issue.

Rebecca J. Rosen. “The Circles of American Financial Hell.” >> Business. May 5, 2016.