Saving for an Emergency Fund
Nearly 6 in 10 Americans do not have enough savings to cover a $500 or $1000 unplanned expense. Surprise bills could be the deductible for a medical emergency, a small fender bender or a repair or replacement for a refrigerator.
Of the 63% who do not have enough in savings, they would pay for their emergency expense with a credit card (15%), cut back on spending in other areas (23%) or borrow money from family or friends (15%).
For the 37% who do have the funds to cover an emergency expense, here are some of the ways they save to avoid long-term financial damage:
1. Set a budget, especially for entertainment and eating out.
2. Establish a savings account at your financial institution.
3. Set a realistic and time based goal.
Daily stops at your favorite coffee shop are fun and convenient but $5 lattes just 3 times a week add up to $15. Over a month, that habit could cost you $60. If you cut back by just one latte a week, you would save $20 every month. That is money that could be direct deposited into your savings account. Over a year, you would have saved $240 just from this one little expense. Cutting back on eating out for lunch everyday will also help you save to your goal.
Savings accounts at most banks and credit unions are free. The easiest way to establish a good savings habit is to pay yourself first. This means setting up a direct deposit from your checking account that puts a specified sum into savings at intervals you decide like every other Friday or once a month. This is one way to set the amount and forget about having to remind yourself to save each week. The automatic deposit does it for you and allows you to save effortlessly.
At Centris Federal Credit Union, there are several options for beginning and more advanced savings accounts. These includes a Savings Club Account, Share Savings Certificates and our Save to Win Contest. For more informative on these accounts, go to www.centrisfcu.org/savings
Once you have met your savings goal, set another one and continue to save for your future. Many long-term savers say that the “set and forget” method is best and it is easy to save without it causing a major disruption to their everyday lives.