Can You Handle A $400 Emergency?

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Can you handle a $400 emergency? A new report shows most can’t. Here are simple tips to build a small emergency fund to have peace of mind.

When I was paying off debt, and even for a short time after becoming debt free I was living on the edge. If a true emergency came about I was scrambling. I’d need to replace something on the car or repair something in my apartment; you fill in the blank and I instantly became nervous.

I’d have cold sweats. I couldn’t focus. I couldn’t sleep. This went on for years and I hated it.

Whatever the emotion, it all came back to one thing – I had no ability to handle an emergency.

The result?

Any time the slightest thing came up I was forced to scramble to find ways to pay for the given event as I had no emergency fund. The sad thing is that the amount I needed to avoid all this emotional discomfort was usually relatively small in nature. Yet I still couldn’t handle it.

When Would You Need to Sell Something?


That’s the question posed by the Federal Reserve. The Federal Reserve found that 52 percent of individuals would need to either sell something, or borrow money to meet an emergency of $400.

Think about that amount for a minute. $400. Now think about the myriad of things that could happen to create a situation where you need access to $400.

Here are just a few things we’ve spent at least $400 on over the course of the past year and had to access one of our emergency funds for:

  • Repair/maintenance work on both of our cars
  • Work on our air conditioner
  • Medical bills (these came out of our HSA, but still view it in a similar fashion)
  • Replacing Mrs. Frugal Rules’ old computer
  • Last minute travel due to the loss of a family member

As you can see, none of them are really glamorous, and aside from the computer, were all needs that can happen at any point – to anyone.

The computer, to be honest, was a business expense, but something we had to save for regardless. I shudder to think of the fact that in previous years I used credit cards to finance such an emergency, keeping myself chained to the payment mentality of financing a solution rather than dealing with the larger underlying issue of my limited financial literacy.

We Have to Look Past Tomorrow


To be fair, there are times where there is a justifiable reason why someone might not be able to handle an emergency. That’s a different topic altogether worthy of discussion.

The underlying issue is the inability or unwillingness to look past tomorrow. I was guilty of this in my free spending days. I lived in the moment, or so I told myself, and didn’t realize I was only harming myself.

I saw an emergency fund as a fool’s errand, and then wondered why I was always scrimping by with no money in my savings account to handle any kind of emergency. Sadly, far too many are stuck in a similar mindset and are unable to see the effect and figure out the cause.

How Can You Build Up A Cushion?


This is one of the biggest questions I hear from readers – how can I build up some sort of savings to be able to handle an emergency? Many experts believe you need to have between 3-6 months of living expenses in an emergency fund.

Tell that to someone who has nothing built up and see his or her reaction. They’re overwhelmed. For someone making a lower salary, the idea of coming up with at least 3-6 months of living expenses in one fell swoop is overwhelming at best and defeating at worst.

They think they need to hit that right away and that anything less is a failure. That doesn’t have to be the case. According to a survey conducted by Bankrate, a majority of Americans polled can’t fund a financial emergency of $500 from their own savings.

Since many emergencies cost around that amount, it makes sense to try to build up an emergency fund with that amount of money in it to begin. There are many ways to save up $500 to stash in an emergency fund. Below are a few:

Find one bill to cut. Whether it be a cheaper cell phone plan, grocery bill or anything else. Take the savings and throw it in a savings account each month. You can get a plan with Republic Wireless, for example, for as low as $15 per month. and save the difference.

If you don’t know what bills to cut, you can always negotiate your bills lower to get extra savings with Trim. Trim is a free to use app that works to negotiate all your monthly bills, helping you save money. They can even cancel subscriptions or memberships you don’t use to help you save more.

Find one way to make extra money. There are many ways to make extra money. You can pick up overtime at work, start a part-time job or launch a side hustle. I know…you think you don’t have the skill to have a successful side hustle.

Can you drive? Do you have a car? You can make money driving for Lyft and last I checked all you need is a clean record and ability to be courteous to people.

You can even take surveys in your free time to build up extra cash. You won’t get rich quick, but they can be a good way to monetize your down time. Below are some of my favorite survey options:

Survey Junkie: One of the top survey sites and they pay cash directly to your PayPal account

Pinecone Research: They pay $3 per survey and they pay cash directly to your PayPal account

Opinion Outpost: One of the top survey sites in the space and they have quarterly $10,000 prize drawings

Inbox Dollars: Earn money for taking surveys, watching TV or making purchases online. Get $5 just for signing up

Get a roommate. Seriously, get a roommate and split the rent or mortgage payment. Take the savings and throw it in a savings account.

Start saving. I know you may feel you can’t save money. I don’t care if it’s $20 per month. After five months you’ll have $100 to fall back on. Start there and build from that. Create momentum and use each $100 level saved as a challenge to save more.

Just make sure to find a bank that lets you you open an account with no minimum balance. Chime has no minimum requirement and rounds up each purchase to the nearest dollar, putting the funds in a savings account.

Can you handle a $400 emergency? A new report shows most can’t. Here are simple tips to build a small emergency fund to have peace of mind.

These are just a few simple ways to begin to build up a cushion to fall back on. There are many other ways, but the key is to pick a way and start. Take that first step and follow with a second one. You’ll be amazed at what kind of momentum you can create with a single step.

Not to mention the fact of the freedom to sleep well at night because you’re not worried about how you’re going to pay for that $500 car repair.


Additional resource: If you’re looking for a simple way to stay on top of all your finances , then check out my favorite tool – Personal Capital. Completely free, it allows you to track your spending, monitor your bank accounts, set payment reminders and watch your net worth grow plus many other tools. We use it in our home to stay on top of our budget.

Open a free Personal Capital account today!


What kind of an emergency can you handle financially? What’s another way you’d suggest to help build up a safety net of $500 or more? What’s something you’ve had to access your emergency fund for recently only to be thankful you had the money?

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.