2 in 3 Americans Can’t Cover a $400 Surprise Expense. Do These Things if You Can’t, Either

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It’s not a great situation to be in. 

As a general rule, it’s important to have enough money in your savings account to cover three months of living expenses. That way, if you were to lose your job or encounter a major bill, like a home or vehicle repair, you’d have cash reserves to tap, and you’d be able to avoid costly credit card debt.

But a recent report by SecureSave found that an astounding 67% of Americans are unable to cover an unexpected $400 expense. And if you’re in that boat, it means you clearly don’t have anywhere close to a complete emergency fund.

Now to be fair, a lot of people’s financial situations deteriorated in 2022 due to inflation. So if you didn’t manage to add any money to your savings last year, or if you had to raid your savings, that’s understandable.

Hopefully, inflation will start to cool off in time. But until that happens, it’s imperative that you do what you can to boost your personal cash reserves. Here’s how.

1. Rethink your non-essential spending

There’s absolutely nothing wrong with spending money on things like social outings, restaurant meals, and streaming services when you’re comfortable financially and have a decent savings cushion. But if you’re sitting on less than $400 in the bank, it’s probably time to stop spending money on things that aren’t absolute needs — at least cut back substantially.

Of course, you have to live, so keeping a streaming service that costs you less than $20 a month isn’t unreasonable, even if you’re sorely lacking in the savings department. But in that case, you may want to tell yourself you won’t be eating at restaurants anymore until your savings are in better shape.

2. Find a way to reduce or offset some of your essential expenses

There are certain expenses you have to pay for, like rent, food, and utilities. But you may be able to reduce or offset some of those bills. Getting a roommate, for example, could cut down your rent costs tremendously. And being more mindful about things like groceries and utility usage could help slash your bills.

3. Boost your income with a side hustle

Not only is today’s job market strong in general, but the gig economy is still very active. If your regular paycheck doesn’t allow you to save much, it could be time to raise your income by taking on a second job.

That doesn’t mean you have to settle for a gig you hate, though. If you love animals, start a pet care business or sign up to work for a dog-walking service. If you’re tech-savvy, moonlight as a web designer. You could even offer up your services as a babysitter if you like children and there are a lot of families in your neighborhood. The extra money you earn could be your ticket to growing your savings.

It’s important to have a decent safety net in the form of savings. If you’re not there yet, don’t despair — but also, don’t ignore the problem. Instead, take these steps to grow your savings so you’re as protected as you should be.

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