4 Tips For Dealing With An Emergency Expense If You Have Zero Savings

You can watch my full YouTube video on this topic here!

If you’re finding yourself in a financial jam and wishing you had more money saved up for a rainy day, you’re not alone!  According to Bankrate’s 2023 annual emergency savings report, just 48% of American adults reported having enough savings to cover 3 months of living expenses.  From that same survey, 57% reported feeling “uncomfortable” with the amount of emergency savings they did have in the bank.  And 22% of those surveyed reported having no savings at all, the second lowest number in 13 years of polling. 

So are Americans worse at saving money than they used to be?  Hardly.  74% of those surveyed blamed inflation, rising interest rates, and unemployment for their lack of (or insufficient amount of) emergency savings. We’ve been through bumpy economic times over the past 3 years, and while inflation is coming down we’re still seeing above-average prices everywhere from the housing market to the supermarket. 

Here are 4 things to do if you run into an emergency expense and don’t have any savings:

1.   Put the expense on your credit card.  This is only an option if you have a card with an available credit limit: according to the 2023 Bankrate survey, 1 in 3 Americans have more in credit debt than in emergency savings.  If you do have available credit, however, putting the expense on the card and working to pay it off later is one option.  If you keep your credit cards around just for this kind of financial safety net, it can be a good tool.  Just don’t make a habit of using credit cards instead of starting to build up an actual emergency savings account.

2.   Cut back on spending on absolutely everything except the essentials.  This is another way to deal with an emergency expense: you route all available dollars towards the bill in question and cut back everywhere else until it’s paid. 

3.    Borrow from family or friends.  This is not an option you want to exercise frequently, or said family and friends will most likely stop picking up the phone when you call.  In an emergency, however, it can be something to explore.  Just make sure to come up with a plan for how you intend to pay them back, just as you would do with any other loan.  Don’t think of money borrowed from family or friends as a free gift, unless they specify that’s their intent.

4.   Take out a personal loan.  Sometimes taking out a loan can be a good route to cover an emergency expense, provided you get the best interest rate and terms available at the time.  Avoid taking out what’s called a “secured loan” in this situation against, say, the equity in your car.  If the emergency situation goes on longer than expected, you don’t want to worry about losing your car to boot!