The $400 test: 63% would pay in cash, stuck there since 2022
In the Fed's 2025 household survey, 63% would cover a $400 emergency with cash or its equivalent and 12% could not pay at all. What the question really asks.
- What happened
- The Federal Reserve Board's Economic Well-Being of U.S. Households in 2025 report, published on May 13, 2026 from a survey fielded October 17–28, 2025, found that 63% of adults would cover a hypothetical $400 emergency expense with cash or its equivalent. The share was the same in each survey from 2022 to 2025, and below the 68% recorded in 2021.
- Why
- The $400 measure counts only people who would pay exclusively from cash, a bank account, or a credit card paid off at the next statement. Anyone who would also borrow, sell something or carry a card balance falls outside it, even if they could pay.
- The numbers that matter
- 63%Would cover $400 with cash or its equivalent, October 2025 survey12%Could not pay a $400 expense by any means, October 2025 survey55%Have a rainy day fund covering three months of expenses, October 2025 survey$19,634Three months of average 2024 spending per consumer unit (our calculation from BLS data)
- Why it matters
- The $400 question measures whether a household can absorb a small shock without new debt. The three-month question measures a much larger buffer, and for a consumer unit spending the 2024 national average the three-month figure is 49.1 times $400.
- What happens nextas we saw it on 7 Oct 2026
- The Bureau of Labor Statistics says it will publish 2025 Consumer Expenditure annual data on October 29, 2026; its survey could not collect data in October and November 2025 because of the lapse in federal appropriations.
The share rose from 50% to a peak of 68% in 2021, then settled at 63% in every survey from 2022 to 2025.
| 2013 | 50.0% |
|---|---|
| 2017 | 59.0% |
| 2019 | 63.0% |
| 2021 | 68.0% |
| 2023 | 63.0% |
| 2025 | 63.0% |
Sixty-three percent of American adults say they would pay a sudden $400 bill with cash or its equivalent. That is the same share as in each of the three surveys before it, and 5 points below the 68% recorded in 2021. The figure comes from the Federal Reserve Board's Survey of Household Economics and Decisionmaking (SHED), fielded from October 17 to October 28, 2025 and published on May 13, 2026 as Economic Well-Being of U.S. Households in 2025.
The $400 line is one of the most quoted statistics in personal finance, and one of the most misread. Its complement is not “37% of Americans cannot find $400”. The survey does not say that, and the Fed does not claim it.
What the question actually asks
The survey instrument in Appendix A asks: “Suppose that you have an emergency expense that costs $400. Based on your current financial situation, how would you pay for this expense?” Respondents are told: “If you would use more than one method to cover this expense, please select all that apply.” There are eight options, the last being “I wouldn't be able to pay for the expense right now”.
The Fed puts a respondent in the 63% only if every method they chose was money in a checking or savings account, cash, or a credit card paid in full at the next statement. In the report's words, 63 percent “said they would have covered it exclusively using cash, savings, or a credit card paid off at the next statement (referred to, altogether, as “cash or its equivalent”).”
The other 37% is therefore a mix: people who would part-pay in cash and borrow the rest, people who would sell something, and people who could not pay. The report lists the other routes:
| Method | % of all adults |
|---|---|
| Put it on a credit card and pay it off over time | 15 |
| Borrow from a friend or family member | 10 |
| Sell something | 7 |
| Use money from a bank loan or line of credit | 3 |
| Use a payday loan, deposit advance or overdraft | 2 |
| Would not be able to pay for the expense right now | 12 |
“12 percent of all adults said they would be unable to pay the expense by any means, down slightly from 13 percent in 2024.” That, not 37%, is the share unable to pay.
Three further limits matter:
- It is hypothetical. It asks how people would pay, not how they did pay an actual bill.
- It records a choice, not a balance. Someone with savings who prefers to spread a cost on a card is outside the 63%.
- The $400 has never changed. It is the nominal amount used since the question was first asked in 2013.
Footnote 36 of the report says that between October 2013 and September 2025 “price levels increased by 35 percent based on the Chained Consumer Price Index”, while median household income rose 56% in nominal terms from 2013 to 2024 (20% after adjusting for inflation). The 2022 survey asked one-fifth of respondents about a $500 expense instead; this “only altered the share who would pay in cash by 0.5 percentage points”.
$400 × 1.35 = $540. In real terms the question now describes a smaller shock than it did in 2013. The Fed's $500 test suggests this has not materially moved the answers.
Twelve years of the same question
Share of adults who would cover $400 completely with cash or its equivalent: 2013, 50%; 2014, 53%; 2015, 54%; 2016, 56%; 2017, 59%; 2018, 61%; 2019, 63%; 2020, 64%; 2021, 68%; 2022, 63%; 2023, 63%; 2024, 63%; 2025, 63%.
The share rose in every survey from 2013 to the 2021 peak. Since 2022 it has neither regained the lost ground nor slipped further. The report does not, in these pages, assign a single cause to the 2022 drop, and neither do we.
A companion question asks for the largest emergency expense a person could cover using only savings. Eighteen percent said under $100 and 12% said $100 to $499. Seventy percent could cover at least $500, 50% could cover $2,000 or more, and 38% said $5,000 or more.
Who is doing okay, and who is not
Seventy-three percent of adults said they were “doing okay” (39%) or “living comfortably” (34%). Nineteen percent were “just getting by” and 8% were “finding it difficult to get by”. The total matched 2024 and was below “the overall high of 78 percent in 2021”, in the words of the Board's press release.
“Eighty-six percent of adults with at least a bachelor's degree reported doing okay financially or living comfortably, compared with 41 percent of those with less than a high school degree.” By race and ethnicity the shares were 82% for Asian adults, 79% for White adults, 62% for Hispanic adults and 60% for Black adults; the report notes the share for Black adults was down 5 percentage points from 2024.
The report's savings chapter presents the $400 measure for all adults, year by year. The group comparisons it prints there are for the larger buffers: three months of savings and retirement. The income gradient runs through every measure.
| Family income | Doing at least okay | Three months of rainy day savings | Retirement saving on track* |
|---|---|---|---|
| Less than $25,000 | 45 | 21 | 7 |
| $25,000–$49,999 | 55 | 39 | 16 |
| $50,000–$99,999 | 74 | 55 | 29 |
| $100,000 or more | 91 | 75 | 59 |
| All adults | 73 | 55 | 35 |
| Group | Doing at least okay | Three months of rainy day savings | Retirement saving on track* |
|---|---|---|---|
| Asian | 82 | 68 | 43 |
| White | 79 | 61 | 43 |
| Hispanic | 62 | 43 | 24 |
| Black | 60 | 38 | 23 |
Three months of expenses, in dollars
Question EF1 asks: “Have you set aside emergency or rainy day funds that would cover your expenses for 3 months in case of sickness, job loss, economic downturn, or other emergencies?” In 2025, 55% said yes, “unchanged from 2024 but down from a high of 59 percent in 2021.” Another 15% said they could cover three months by borrowing, using savings or selling assets. Thirty percent said they could not cover three months by any of these means.
The Bureau of Labor Statistics' Consumer Expenditure Survey, in its release of December 19, 2025, put average annual expenditures for all consumer units in 2024 at $78,535, up 1.8% from $77,158 in 2023. Housing was the largest component at $26,266; personal insurance and pensions, which include Social Security and employee pension contributions, were $9,797. A consumer unit is a family, a financially independent person, or people sharing major expenses. The 2025 figures are scheduled for October 29, 2026.
$78,535 ÷ 12 = $6,544.58 a month. Three months: $6,544.58 × 3 = $19,633.75. Leaving out personal insurance and pensions, which largely stop when a paycheck stops: ($78,535 − $9,797) ÷ 4 = $17,184.50. Housing alone for three months: $26,266 ÷ 4 = $6,566.50. Set against these, $400 is 6.1% of one month's average spending, or 1.86 days of it ($78,535 ÷ 365 = $215.16 a day).
Only 38% of adults said they could cover $5,000 or more from savings, yet 55% said they had three months of expenses set aside. The report flags a version of this itself: 50% could cover $2,000 or more, “Yet, a higher 55 percent said they had rainy day savings to cover three months of expenses.” Our reading: respondents define “your expenses” for themselves, and many spend well below the BLS mean, which high spenders pull up. The three-month answer is a self-assessment, not a dollar test.
Retirement and prices
The share was 35% in 2025, the same as 2024, above 31% in 2022 and below 40% in 2021. The question “did not prompt respondents to consider any particular type of assets or level of income”, so respondents “could determine for themselves what they considered on track.” Fourteen percent of non-retirees borrowed from, cashed out or reduced contributions to a retirement account in the prior 12 months.
Fifty-eight percent said changes in the prices they paid compared with the prior year had made their financial situation worse, including 14% who said much worse; the share was 60% in 2024 and 65% in 2023. The share calling “price increases” a “major concern” fell to 53% from 56%. In response to higher prices, 62% switched to cheaper products and 41% reduced saving.
What it means for your money
The $400 question and the three-month question measure different things. The first asks whether a small, sudden bill can be paid without new debt. The second asks whether a household could keep going if its income stopped. For a consumer unit spending the 2024 national average, the second is 49.1 times the first: $19,633.75 ÷ $400 = 49.1.
The same arithmetic works for any household with its own figures, and needs no national average:
- Add up one month of spending that would continue if income stopped: housing, food, transport, insurance, debt payments.
- Multiply by three. That is the three-month figure the SHED asks about, in your own terms.
- Compare it with balances held in cash or a bank account. The difference is the gap the survey is trying to detect.
- For a single shock, the $400 test is simpler: could it be paid in full from the account, or when the card statement arrives?
Our pieces on the household saving rate and inflation and cash savings cover the national picture; the emergency fund entry explains the term.
Sources
- Federal Reserve Board issues Economic Well-Being of U.S. Households in 2025 report (press release, May 13, 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Economic Well-Being of U.S. Households in 2025: Executive Summary (May 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Economic Well-Being of U.S. Households in 2025: Overall Financial Well-Being (May 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Economic Well-Being of U.S. Households in 2025: Savings and Investments (May 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Economic Well-Being of U.S. Households in 2025: Income and Expenses (May 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Economic Well-Being of U.S. Households in 2025: Accessible Version (figure data)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Supplemental Appendixes to the Report on the Economic Well-Being of U.S. Households in 2025, Appendix A (survey instrument)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Economic Well-Being of U.S. Households in 2025: Description of the SurveyBoard of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Economic Well-Being of U.S. Households in 2025: Fact Sheet (May 13, 2026)Board of Governors of the Federal Reserve System · Oct 4, 2026 · Primary source
- Consumer Expenditures--2024 (news release USDL-25-1586, December 19, 2025)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Consumer Expenditures--2024, Table A (news release PDF, December 19, 2025)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- 2025 federal government shutdown impact on the Consumer Expenditure Surveys (last modified July 30, 2026)U.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
- Consumer Expenditure Surveys: GlossaryU.S. Bureau of Labor Statistics · Oct 4, 2026 · Primary source
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