What if you wake up Monday morning to a broken fridge? What if rush hour pushes you into an accident and totals your car? Do you have emergency savings to fix it? Most Americans don’t. Here’s how you can boost your bank account and soften the blow of an emergency.
If your savings are lacking, you’re not alone. About 63% of people don’t have enough savings for a $1,000 emergency,¹ and 1 in 3 households don’t have savings at all.²
“So I don’t have a financial cushion,” you say. “I still manage to pay the bills each month.” Sure, you have to rely on credit cards here and there, but what’s the big deal?
60% of Americans experienced a shocking financial setback in the past year.³
If you were faced with the same problem, what would you do without savings? 23% of people said they would decrease their spending (goodbye coffee and cable), 15% would borrow from a friend or family member, and another 15% would rely on credit cards (hello debt!).¹
Here’s how you can build savings and make a financial emergency just a small bump in the road.
1. Meet Your Goal
Ideally, you want to save enough to cover at least 3 – 6 months of expenses (if not more), but that can be a pretty daunting sum. Instead, start off with small goals and celebrate each time you get closer. A good place to start would be to save $1,000. Once you reach that, celebrate with something small then keep saving enough to reach a month’s worth of expenses, then three months, and so on.
2. Every Little Bit Counts
Even if it’s as simple as putting your leftover change in a jar each day, it helps! As soon as those coins enter the jar, you’ve got more money to your name – more money to help you. It also helps you make a habit of setting money aside. Once you’ve got the habit down, start putting more and more into savings.
3. Create a Separate Savings Account
Hopefully, you’ll start saving more than junk change for emergency savings, and when you do, you’ll probably turn to your bank account. Consider opening a savings account that’s separate from your other accounts so the money you deposit is clearly for emergency use only, and you’re less tempted to use it for something else.
4. Find a Better Deal
If you’re having trouble finding extra money to put towards savings, consider cutting costs on monthly expenses and putting the extra cash towards your new goal. Research cable and mobile plans to see if you’re still getting the best deals on the market. Talk to your utility companies about cost-effective times to use your electricity and water; for example, waiting to run your dishwasher or take a shower until after peak hours could save you money on your next bill.
5. Work with a Money Coach
Working with a Money Coach can propel you towards your goal because you’ll have professional financial guidance and accountability. Your coach can show you how to track your spending and create a budget to see where it makes sense to cut down expenses and put more towards savings.
6. Experience Peace of Mind
When you have a financial cushion, an unexpected expense doesn’t seem so daunting because you aren’t scrambling to find the necessary funds or wondering how you’ll meet the rest of your usual expenses. Here’s a great example from a gal who worked with her Money Coach to build emergency savings: “It’s my birthday, and my newer (2010) car decided to break down while I was driving it today. I’m so happy we have that emergency savings account, thanks to you! This stuff isn’t so bad when you have a little cushion.”
Get better equipped to easily overcome financial challenges and accomplish financial goals by increasing emergency savings. Your Money Coach can help. Call 888-724-2326 to get started.
¹Fottrell, Quentin. “Most Americans are one paycheck away from the street.” marketwatch.com. MarketWatch, 6 Jan. 2016. Web. 15 Jan. 2015.
²Financial Security and Mobility. “Pew Survey Shows Americans’ Financial Worries Cloud Optimism: Sense of Improving Conditions Outweighed by Feelings of Insecurity.” pewtrusts.org. Washington: The PEW Charitable Trusts, 5 Mar. 2015. Web. 19 Aug. 2015.
³Financial Security and Mobility. “Americans’ Financial Security: Perception and Reality.” pewtrusts.org. The PEW Charitable Trusts, 5 Mar. 2015. Web. 19 Aug. 2015.
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