Recent studies found that 44% of Americans couldn’t cover a $400 emergency expense out of pocket, and only 39% of Americans would be able to pay for an unexpected $1,000 expenses out of their savings. Leaving 61% of Americans to find some other means of paying for the expense. Whether that be using a credit card, reduce spending on other items, borrowing from a friend or a bank using a personal loan.Building an emergency fund is critical and can help soften the blow when unexpected expenses come up; A broken down appliance or vehicle, meeting an insurance deductible, medical procedure, or a loss of income due to a lay off or disability. The old saying goes, “things happen.”
The task of building an emergency fund has somehow gotten lost in society as the wants and needs of younger generations has changed. How we are able to spend our money has gotten so much easier with online shopping, auto reload features on coffee shop apps, in addition to swiping a piece of plastic to intangibly pay for items. The evolution of how we spend our money has made life easier, but has disrupted the way in which we manage our personal finances.
These same tools and resources that are available to pay for things quickly and conveniently are also available to help save money. Direct deposit, auto-transfer and budget phone apps can help create emergency funds. An emergency fund is not created overnight and is a mindset. Developing a plan is something that requires commitment. Creating a specific plan, such as a $20 per week auto transfer, or $50 direct deposit to savings per pay period can get you started on building up an emergency fund.
My goal is to be a resource to the community regardless of business obligations. If you, or someone you know, struggles to save more money, or pay down debt, do not hesitate to reach out for a free consultation.
Statistical reference:
www.bankrate.com/banking/savings/financial-security-january-2019/
www.bankrate.com/banking/savings/financial-security-january-2019/