The $400 Question

The Federal Reserve asks American adults one question every year: could you cover an unexpected $400 expense with cash? The answer explains more about financial stress than any income statistic.

Last verified 2026-07-16

One survey question, asked every year

Since 2013 the Federal Reserve has run the Survey of Household Economics and Decisionmaking, and one question in it has become a standard measure of financial fragility: could you cover an unexpected $400 expense using cash or its equivalent?

In the 2024 survey, 63% of US adults said yes. 13% said they could not cover it at all, by any method. The measure peaked at 68% in 2021, when pandemic-era transfers were still flowing.

The number is useful precisely because $400 is small. It isn't asking whether you're wealthy — it's asking whether an ordinary car repair turns into a financing decision.

Why a small buffer prevents a large problem

A buffer's value isn't the amount it holds. It's the set of expensive options it lets you decline.

Without one, a $400 car repair becomes a credit card balance at around 22% APR, or an overdraft fee, or a payday loan, or a missed payment that damages your credit file for years. Each of those makes the next shock harder to absorb, which is what turns one bad month into a spiral.

This is also the answer to the question of whether to build a buffer before attacking high-rate debt. Mathematically the debt costs more. Practically, paying every spare dollar toward debt with zero buffer means the next surprise goes straight back onto the card — and now you're paying interest on it again.