According to a recent survey by NeighborWorks America, more than a quarter of American consumers have no emergency savings fund. If you are one of those 25%, you probably feel like you are living one disaster away from a financial crisis. What happens when the car breaks down or you have a health emergency? Without an emergency savings fund, you might not be able to cover the bill from your regular pay check.
Not having emergency savings is a very big problem for homeowners living on the financial edge. When the furnace goes out in a rental property, all you have to do is call the landlord and they are responsible for fixing the problem…at no cost to you. However, if you are a homeowner, you don’t have that same luxury. When you own your home and something breaks, you are the one that has to pay for repairs.
Most financial experts recommend that you have 3 to 6 months of expenses sitting in your emergency fund. With that amount of savings, you can weather storms like job or income loss or a health crisis. An emergency fund on that scale can cover many home repairs. Don’t have that kind of emergency savings? Start small and save what you can. Even just $1,000 can make modest repairs to your car and your home.
Start Saving Now
Want to start an emergency savings fund? Go over your budget and decide how much you can afford to save and make saving automatic. That means having the money deducted right out of your paycheck and deposited into a savings account specifically set up for emergencies.