If you faced a sudden unexpected expense of $2,000 in your life, could you handle it?
A new study from the National Bureau of Economic Research found that right at about 50% of Americans “certainly” or “likely” would not be able to come up with any money at all. (Researchers picked $2,000 because that’s a representative number of a major unforeseen car repair or medical expense.)
The study revealed that income was not a direct indicator of who could cope with an unexpected expense. Roughly half of all Americans are in a position where they are Wile E. Coyote out over the edge and looking down in those old cartoons.
Now, I know there are some circumstances that just blindside you financially in life. But other times, making nips and tucks in your life can bring you back from the edge of the cliff.
If you are in the half of Americans who can’t handle a major expense, let me ask you this: How much could you come up with per week? $1? $2? $10?
Whatever it is, start taking it and stashing it away. I don’t care if you put it in a jar in your house. Just start the process of building a reserve. If it’s $10 a week, that becomes $500 over the course of a year.
Maybe you can just take your change and throw it into a jar at the end of the day. Or one of my fellow talk show hosts, Neal Boortz, recommends taking all your $1 bills out of your wallet each night and putting them aside as a way of forced savings.
Just do something to get the job done if you’re among those that can’t hang with an unexpected expense.