An Emergency Fund Flattens the Money Bumps of Life
If you’re already struggling to save, one mishap can put you over the edge.
The air conditioner needs a repair, you’re in an accident and need to cover your deductible — life just happens!
In its 2019 Report on the Economic Well-Being of US Households, The Federal Reserve found that 40 percent of adults couldn’t come up with $400 for something unexpected without selling something or borrowing the money.
Yikes.
The good news? There isn’t any. Forty percent of adults not being able to find four bills should scare all of us.
What’s even crazier? Almost three-quarters of those surveyed said they were doing “OK” or living comfortably! That’s another topic entirely.
How much should I save?
Well, that depends.
One expert says to start with $1,000.
Ask your HR/Payroll department to start sending $40 to a savings account from each paycheck (assuming you’re paid biweekly). In a year, you’ve got just over a grand.
Concerned you can’t possibly live without the extra $40 per pay? You’re not looking closely enough.
Now that you have your $1,000 in the bank, don’t touch it unless it’s a true emergency.
