Americans Can’t Afford Emergencies!
If an emergency happened tomorrow, say a trip to the ER or a flat tire, could you easily reach into your savings account to cover it? If you’re like most Americans, unfortunately, you couldn’t. There’s a surprising percentage of people who are living paycheck to paycheck without an emergency fund and not putting much or any money into savings.
Most Americans don’t have the money to handle common emergencies like a car breakdown or a trip to the emergency room for a broken bone.
In a national survey by Bankrate.com, 63 percent of people said they don’t have the savings to cover a $500 car repair or a $1,000 medical or dental bill. Only four in 10 Americans would be able to rely on savings to cover anything beyond their usual bills.
That suggests most people are living paycheck to paycheck, with common problems like a car accident or a sick pet upsetting their ability to pay. The survey found that only 23 percent thought they would be able to handle an emergency bill by cutting other spending.
Another 15 percent said they would cope by borrowing from their family. And 15 percent would depend on a credit card.
The findings mimic others and show that most Americans are financially vulnerable. Although consumer confidence numbers gathered each month by the Conference Board show Americans feeling good about jobs after recovering from the Great Recession, most still aren’t stashing money away regularly.
A Federal Reserve study of the “well-being of U.S. households” in 2014 showed only about half of people saving regularly in a separate account like a savings account.
– via chicagotribune.com
Tips To Get Started
If you’re ready to set yourself apart from the masses and start building a reliable emergency fund, these tips will help. Even if you have to start small and slowly, every dollar you put away is a step in the right direction!
If you’re used to walking around without any money in your wallet, then maybe the college habit of surviving on ramen noodles made a big impact on you. Either that, or you’re so adept at using banking apps and debit cards that you really don’t see the need for carrying more than $20 on you.
But when it comes to emergency savings, that’s another story, at least for some. Ask any young adult whether it’s a good idea to have such a stash on hand, and you’ll hear an overwhelming number of “yes” votes. But not everyone’s ready for a potential financial calamity, according to a new report by Bankrate.com…
If you’re in the position of having little or no emergency savings, what can you do to reverse the tide and catch up? Consider these action points:
1. Take the idea of emergency savings seriously.
It’s understandable that youth means feeling invincible. But it only takes one medical emergency, a job loss or an event beyond your control to wipe out everything you have. In those cases, having an emergency fund could mean the difference between surviving and struggling.
2. Use direct deposit to your advantage.
“The first thing you have to do is get in the habit of savings, and the best way to do that is to set up a direct deposit from your paycheck into a dedicated savings account,” McBride says. “If you try to wait until the end of the month to see what’s left over, usually nothing is left over.”
3. Adjust your budget to make room for emergency savings.
“You’ve got to boost your income or cut back expenses,” McBride says. “That means working freelance, getting a second job, or taking a long hard look at your expenses and seeing where you can cut back.”
I learned how to practice what I’m preaching here the hard way. During a recent health scare, I realized I was one of those people with little or no emergency savings. Today, I have five months worth, and it’s gone a long way towards giving me peace of mind.
– via Money Under 30
Are you ready to start truly investing in your emergency fund?