We hear over and over about the importance of saving, but the reality is, for many Americans, building a financial safety net remains a challenge.
New data reveals that a concerning 60% of adults in the U.S. report feeling uncomfortable with their current level of emergency savings, according to a recent Bankrate study.
Unexpected expenses can derail a monthly budget in an instant.
A medical emergency, natural disaster, or car accident -- unexpected costs can hit hard, and usually, you can’t afford them. In the past year, about 37% of adults in the U.S. had to tap into their emergency savings, but do you have enough saved just in case?
Financial experts say it’s best to have three to six months of living expenses saved.
To help build that amount, United Way says the first step is to prioritize a monthly budget.
Start by calculating fixed expenses such as mortgage, rent, car payments, and utilities.
Next, look at other bills or debts that need to be paid, things like credit cards and student loans.
Then, from the remaining expenses, consider things that could be cut, such as subscriptions or dining out. That money could be moved to an emergency fund.
The Financial Counseling Association of America says it’s OK to start small, even a few dollars a week.
Setting up an automatic transfer allows money to be saved consistently. Bonuses or tax refunds are a great way to boost the amount.
And consider a high-yield savings account to help the money increase faster.
Experts say to avoid using the emergency fund for vacations and shopping. Instead, keep the money in an account that’s not easily accessible, so it’s there when you really need it.
And even if you can only start saving $25 a week, in a year, you’ll have $1,300.