If you’ve been thinking about ways to save, but haven’t really started, now’s the time to do it because it’s America Saves Week! In conjunction with this nationwide event, we’ve been offering tips and insights on saving each day this week.
The goal of America Saves Week is to encourage individuals and families to save money and build personal wealth as well as improve financial literacy.
As you well know, you don’t get a heads-up when there’s an emergency. Car repairs, medical situations, household appliances breaking down – these are just a few of the unforeseen things you could be faced with. But you can prepare for them by putting savings aside.
Here are some ways to create and build up an emergency fund:
- Have money directly deposited from your paycheck into a savings account intended exclusively for emergencies.
- Consider opening an account that gives you limited access to the money, such as a holiday account. These accounts typically charge a penalty if you withdraw more than your allowed, so you’re less tempted to tap into it.
- Set a goal and work towards it. And make sure it can be realistically attained. That may mean targeting a goal of saving $1,500 versus $5,000 for the year. If you find you’re reaching your goal sooner than expected, you may want to consider upping the number.
- Include setting aside a specific amount for emergencies as part of your budget. This will help you stay on track for building the fund and reaching your goal. Consider your emergency fund allotment as paying a monthly bill.
- Don’t use the emergency fund for non-emergencies. Plan ahead for bills you know you’re going to have to pay, such as an annual car or house insurance payment, rather than tapping your emergency money to cover the bill.
- If possible, create short-term and long-term emergency accounts. Short-term would cover such things as car repairs and appliance replacement, while long-term would be intended for major setbacks such as job loss or a house fire.
- Experts suggest having an emergency fund that could cover six months’ worth of expenses.
- Choose an account that allows you to access the money quickly and without penalty. For instance, a savings account usually is a safe bet, while a CD account could carry a penalty if you withdraw funds prematurely.
- Look for ways to cut down on expenses and then put that money toward an emergency fund.
We hope you benefitted from the savings tips we offered this week. Check out www.americasaves.org for additional timely savings tips and advice!