Emergencies happen to everyone on a regular basis. But most Americans do not plan well for emergency expenditures. What if your car breaks down, you or a family member get sick, your refrigerator quits working, or some other sudden expense hits you? You should be prepared for such occurrences if possible. This always means having an emergency savings fund in place. Having a cushion, even if only $1,000, can protect you financially and save you extra money from loan costs, etc.
Several decades ago, the savings rate was much higher. But today, the U.S. Bureau of Labor Statistics says it is 6%, the lowest level in more than a decade. This is a continuation of a 50+ year trend in savings rates in the U.S.
What percent of Americans have no emergency fund?
According to the Federal Reserve, only 4 of 10 adults in America have enough savings to cover a $400.00 emergency expense. Everyone else would have to borrow from friends, relatives, or request an emergency payday loan from a lender. Or, they would have to sell something to cover the expense, if they have it.
Less than 20% of Americans say they could live off their savings for even 6 months.
Does America have a savings crisis?
Yes, we do. Not having emergency savings or a rainy day fund is a mistake too many Americans are making. It isn’t easy to save but even tiny amounts will add up. What if you put just $25 into your savings every paycheck? Put it there and forget about it. If you get 2 paychecks a month you will have $300 in 6 months and double that in a year.
That would be a great start and you probably won’t miss the $25 every 2 weeks. A few fewer coffees or smoothies is all it takes.
Why an Emergency Fund Is Important?
An emergency fund is important because most people end up with a loan when in a pinch and increase their expenses as a result. With an emergency fund, you may be able to avoid doing this and maintain a lower monthly expense budget. This may also help you in saving even more or replenishing your emergency fund.
How much we should save for emergencies?
Everyone should want to see American savings rates increase. It is good for every one of us. The amount you save depends a lot on your circumstances. Ideally, we should all have 6 months savings we could always live off. This may not be practical for many on low incomes or with a poor credit score. So they can easily request for online payday loans to get cash fast — no weeks or months of waiting to find out if they are approved. These loans if taken from legitimate lenders, not only help people to handle an emergency but also help them with crucial repayments and budgeting.
But, even on a low income, setting a budget and understanding exactly where you are spending money can go a long way to starting to save regularly. Saving is a habit if done well. And anyone can form this habit if they put their minds to it and commit to saving as much as possible.
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