Save for the Unexpected: America Saves Week

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As part of your savings journey, we encourage you to set goals. What you save for will depend on what’s important to you, so you might save for an education, to become a homeowner, or for vacations, a new car, etc.

But your first savings goal is the most important one, and it’s the same thing everyone should save for first—emergencies.

After 2020, surely everyone has learned the importance of saving for the unexpected. With so many things outside of our direct control that could leave us financially strapped, an emergency savings fund is an absolute must.

Day 2 of America Saves Week this year is about saving for the unexpected. In previous years during America Saves Week, 25% of savers said emergency savings were their first goal.

Why an emergency fund is a must

Like we said, the coronavirus pandemic should have established for everyone the why of emergency saving, but there are a lot more reasons than just once-in-a-generation pandemics that count as bona fide emergencies.

You might need emergency savings if:

  • You need emergency car repairs (and you can’t get to work without a car)
  • Your home needs emergency repairs to make it livable or secure
  • Your income is interrupted, through illness or unexpected job loss
  • A family emergency requires to you to pay for unexpected travel expenses

How to establish an emergency fund

The best way to build emergency savings is to use the method we talked about yesterday; automatic saving.

This is such an important savings goal that you shouldn’t leave it to chance—set up an automatic savings arrangement so emergency funds start accumulating right away.

If you don’t have enough money to set aside, then you probably need a budget. Take a free online course in budgeting, or download one of our workbooks. Only by having a spending plan for all of your income will you be able to set aside what you need for your important savings goals.

How much do I need to save?

Save as much as you can, and try to build up at least $500 in emergency savings to start. From there, set a goal based on your income. 3 to 9 months’ income is the standard.

According to the Bureau of Labor Statistics, the average period of unemployment for a displaced worker is currently 6 months, so you need to be able to get by for at least that long if you should unexpectedly lose your source of income.

Where should I keep my savings?

Emergency funds should be accessible if you need them, but not so accessible that they’ll be spent on non-emergencies. A savings account that is separate from your checking account is probably best, as accessing the funds in a CD, bond, or other long-term savings vehicle might not be convenient when an emergency happens.

Take the pledge to save this year at our “San Diego Saves” or “Inland Empire Saves” campaign pages. Once you’ve got those emergency funds saved up, you’ll be able to start thinking about all the other important financial goals worth saving for.

America Saves Week

Have you heard that it’s America Saves Week?
Yesterday, we had a free webinar about how to Save Automatically. This helps you prepare for the worst case scenario and Save for the Unexpected.

Today at 10am (PST), we’re hosting a free webinar about saving for unexpected circumstances and teaching you how to be prepared:

Tuesday, February 23rd | Save for the Unexpected: America Saves Week

  • Get timeless information about what’s on a credit report, how it gets there, how a credit score is calculated, and how to develop good financial habits. Learn strategies to budget and take control of your finances by learning to budget your paycheck.
  • Duration: 1hr
  • Sign up for this webinar

Join us in tomorrow’s session at 10am (PST) to learn how to Save to Retire:

Wednesday, February 24th | Save to Retire: America Saves Week

  • Start saving for the future by learning the basics first. Understand what your priorities should be when you tackle financial planning and avoid sales pressure from investment advisers.
  • Duration: 1hr
  • Sign up for this webinar
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About The Author

Melinda Opperman is an exceptional educator who lives and breathes the creation and implementation of innovative ways to motivate and educate community members and students about financial literacy. Melinda joined credit.org in 2003 and has over 19 years experience in the industry.