Our April showers may be over, but the need for a Rainy Day fund follows us all year long. Many Americans get caught because they don’t have emergency money set aside for those unexpected events like job losses, car repairs, new furnaces, or emergency travel. Without an emergency fund, families are forced to borrow money, sometime beginning a cycle of debt that is difficult to escape. Keeping money set aside for these occasions may be the biggest difference between those who come through bad times and those who get bogged down in debt.
Depending on your situation, experts recommend having 6-12 months of your monthly minimum expenses set aside for emergencies. However, this can be a daunting challenge. On the way, it can help to start small – perhaps with $500-$1000 put aside for emergencies.
Do you need a jump start for your savings? Try these tricks:
- Save Automatically. Have part of your paycheck automatically deposited into a savings account or set up regular transfers from your checking to your savings account.
- Save your loose change. Putting aside fifty cents a day over the course of a year will allow you to save nearly 40% of a $500 emergency fund.
- Make your monthly credit card payment on time. The $30-35 you save by not being charged a late fee each month on one card would save you most of the money you need for $500 in emergency savings.
- Bring lunch to work. If buying lunch at work costs $5, but making lunch at home costs only $2.50, then in a year, you could afford to create a $500 emergency fund and still have money left over.
Where is the best place to keep emergency savings? You want to find a place that is safe but that is not too easily accessible, so you’re not tempted to use the money for non-emergency purchases. A savings account at a bank or credit union is a fantastic place to keep savings. It’s safe, and you might even earn a little interest on it. If you are in Ohio, check out the SaveNOW account. If there is a participating bank in your area, the state treasurer will subsidize the account with 3% interest at the end of a year. Click Here for all the details.
Looking for more ways to save? Check out Ohio Saves. It has great ideas and resources for saving money. You can even make a pledge that you will start today to save money, reduce debt, and build wealth: Ohio Saves
Written by: Betsy DeMatteo, Family & Consumer Science Educator
Source: Consumer Federation of America: www.AmericaSaves.org