How do you feel when you’re about to get out of your car, it starts pouring rain, and you realize you don’t have an umbrella?
If you’re like most of us, you’ll think, Shoot, why don’t I ever have an umbrella with me?
Not having an emergency fund can be the same with our finances.
Simply stated, an emergency fund is money that you have set aside specifically in the event of an unplanned expense such as a loss of employment, home or car repairs, or an illness. Many financial experts recommend building up an emergency fund of 3-6 months of average expenses.
There are lots of reasons why you might not have one – it’s overwhelming to think about putting so much money aside, you have too many bills, you already contribute to a 401K, you’d rather buy a new car - all good excuses but not fiscally smart.
What happens when your car dies, the mechanic says it’s going to cost $6,000 to repair and you only have $3,000 in the bank?
You have to either borrow from a friend or family member, which adds to the stress of the situation, or you are forced to put it on a credit card, meaning you’ll be paying 15 to 25 percent interest monthly and it may take months or even years to pay off.
Having cash on hand in an emergency savings account means in case of a situation like this, you can tap into it, and then move on and focus on building your fund back up.
A 2023 study by Ramsey Solutions revealed 54 percent of Americans worry daily about their financial situation and roughly 1 in 3 Americans have no savings at all.
You can’t prevent bad things from happening, but you can give yourself the comfort of knowing that when they do, you’ll have it covered when an unexpected expense arises. Learning to be financially responsible will be a life-long gift to yourself.
It’s not easy or everyone would already have one. But there are millions of people who do, so it is possible, no matter what your income.
Getting started is easy and can be done in two easy steps!
Open a savings account specifically for your emergency fund.
At Crews Bank & Trust, you can open a savings account online or stop into your favorite branch and a personal banker would be happy to help you.
Set up automatic transfers.
At Crews Bank & Trust, you can do this right from your phone, online or in any branch.
Once you’ve reached your first goal, give yourself a small reward for the effort you’ve put into this. Drive through Starbucks and have that latte that you’ve forgone for so long. It will taste even sweeter because it was hard earned. Then, start working towards your next small goal.
The feeling of security of knowing that if your car breaks down that you can manage it without out using a credit card or borrowing will be worth it!