Most Americans couldn’t come up with $2,000 if they needed to

Ramit Sethi

Years ago, I wrote a post about my $100,000 friend — who made 6 figures but lived paycheck to paycheck.

I know several people like this. And now, the data to back it up.

According to the Wall Street Journal, nearly half of Americans say they “definitely or probably” could not come up with $2,000 if they needed to.

“The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable.”

Why $2,000 as the dollar amount? As it turns out, that is a good proxy for the typical unexpected repairs most of us encounter in day to day life:

“The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.”

Even sadder are the ways in which people say they would TRY to come up with the money, including such gems as:

  • Credit cards
  • Payday loans (WTF?)
  • Selling possessions

These are the dreams of someone who has never systematically thought about what they would do if they needed money for an emergency.

As I’ve always said, one of the primary differences between Rich people and others is that Rich people plan before they need to.

Some points to consider:

  • Financial surprises are a part of life — praying they don’t occur is not a viable strategy. That’s why I have a Stupid Mistakes sub-account in ING

  • There are people who have such tight living situations — low incomes, multiple kids, unstable jobs — that they live paycheck to paycheck. But the unwelcome truth is that most people in their 20s who live paycheck to paycheck simply have a spending problem
  • Telling yourself, “I really should set up an emergency fund” is the same old tired song that produces little behavioral change. Instead, automation will automatically grow your savings without you even noticing the money going to your savings account
  • Another claim we make is, “I’ll do it later…when I have more money.” Yet in your late 20s/early 30s, most people get married, which incurs huge costs. Then there are several predictable costs including travel, kids, a house, and more. My friends at Vanguard know about the “trough of saving,” which makes it incredibly difficult to save in your 30s. There is a simple solution — The 10 Year Savings Strategy — yet the vast majority of people never take 1 day to implement it.
  • There are Big Wins for savings that you could implement immediate to kickstart your savings account with thousands of dollars
  • And there’s also earning more money. Earning side income (apart from your full-time job) lets you throttle your income up or down at will, and respond to any financial crises/opportunities that arise
  • You don’t need to invent the next Google or Facebook to make money on the side. This turns out to be a HUGE psychological barrier of people who want to earn more money. They genuinely believe they have to quit their job and start the next Google, instead of earning money on the side (much more likely)

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  1. Ben

    “Spend last year’s money today, not next years money now.”

    Quote of the day.

    • Melissa @

      Establishing an emergency fund is essential protection (I made a video
      about it: but, as you stated, it’s hard when you’re living paycheck-to-paycheck, which CareerBuilder says 77% percent of workers are doing. This is such a big percentage of people, I think it is evidence to your point that many people in their 20s are not spending wisely. Having healthy finances is like being on diet. It’s not always fun, and success is achieved through a lifestyle commitment.

  2. Mike

    Any opinion on ING being bought by Capital One?

    • matt

      why do people continue to bring this up? Do you think that capital one will just steal your money? The money is FDIC insured. The only thing that can change is the interest rate, which is already pretty low. I don’t understand the “i’m closing my account!” responses to this. I can’t possibly be alone in this thought.

    • JD

      I don’t think the concern is that Capital One will steal our deposits, but they could start adding all sorts of ridiculous fees and minimum balance requirements and change everything we like so much about ING – the ease of account setup, the bill-paying features, the nice interface, etc. In other words, turn it into just another bank.

  3. Joseph

    It’s crazy to think that about half of all Americans would not be able to come up with $2,000 if an emergency came up. It really shouldn’t surprise me, however, as I’m sure if I surveyed a random sample of 20 of my friends the majority of them would probably not have easy access to that amount of money.

    I’ve been automating for years now, Ramit, and it’s definitely paying off as my emergency funds (and other sub-savings accounts) have grown substantially without any effort on my part. Great post!

    P.S. I’m not in San Francisco, but if you ever want to spread your testing out on the iPhone app count me in.

  4. Max

    For many people it is extremely difficult to come up with $2,000. I see you mentioned payday loans. Those interest rates are so high that they will just put you further into debt, hence the (WTF?). There are other options. There are places where you can get a line of credit based of the equity of your vehicle. I’m not talking about a traditional title loan where you could end up with 100% APR. These are new consumer loans based off your car and can be found in virtually every state. They also have interest rates that are lower than many credit cards because they base the loan on your vehicle as well as your credit. Generally these new “title loans” hold an APR of 19% Often they are marketed as title loans, but they are really as I mentioned before, a line of revolving credit, using your vehicle’s equity. Just do your digging and you should be able to find one in your state!

  5. rudy j


    I’ve been automating my saving for awhile even when I was making minimum wage I’d always save a little even it were just $5 or $10, and while my savings accounts aren’t as specific as yours. It still helps to have some saved for emergencies. I did go over my “fun” budget while I was in a strip club a few months ago. So I’m glad that I had the cash to back it when I returned.

    Thanks for all your great posts…

  6. P.

    I can agree with this survey. I couldnt come up with $2K in a month. I can get close (like 1500) but no cigar. I blame my habits. I am changing them as we speak,

    Most importantly, what about Android Ramit lol? I will test an Android app. I traded my iphone in last year.

  7. Victoria

    I live off $35k/year and can up with more than $2k in a snap if an emergency came up since I have a 6-month emergency fund. I actually ended up in the emergency room last month and expected to dip into my emergency fund to pay the huge co-insurance payment, but instead called up the hospital and negotiated a discount and to be placed on a no-interest payment plan, which keeps that emergency fund available.

  8. Sunil from The Extra Money Blog

    very unfortunate, and perfectly believable . . . . hoping your book encourages readers to make a difference by initiating change from within. without the genuine desire from within, all external material is useless

  9. Greg Miliates

    Increasing your earnings, along with managing your expenses, is a great path to wealth, without having to eat cat food along the way. And starting a side-hustle, such as a consulting business, is a great way to boost your cash flow.

    That’s what I did several years ago, where I became a consultant while working at my day job. Over time, I built my consulting business into a full-time endeavor, where I now make several times what I used to at my day job, and have much more flexibility.

    What’s more, having a day job is actually much MORE risky than starting a business. If you lose your day job, you’ve lost your sole source of income, and can be in dire straights. But if you’re a consultant and lose 1 client, you’ll have other clients who will fill the gap, and you can also find additional clients. The risk is much lower, and the income potential much higher with your own consulting business.

    I have a blog ( which gives you specific, concrete advice, tips, tricks, tools, and techniques for starting and running a successful consulting business. For example, how to get past your fears, or how to create your professional website for under $100 in just a couple hours–even if you’re not a techie.

  10. Antonio

    You know Ramit I have bought your book, read your blog too some of your courses and I am now in a worst situation now than I have every been. Its not because you didnt provide life changing information. I am sure I have some kind of psychological barrier that is preventing me from reaching the level of greatness in life I am suppose to reach. Right now I have a choice to make, wallow in my situation or take action with the knowledge I have now. Currently I believe my issue is income So got get some side stuff in and at least build some kind of emergency fund. So hear I go..T