Emergency savings can help cover expenses

Building an emergency savings fund is a difficult but necessary task for many families. Having an emergency savings fund may be the most important distinction between those who manage to stay afloat and those who are sinking financially. That’s because maintaining emergency savings of at least $500 to $1,000 allows you to meet unexpected financial challenges, such as repairing the brakes on your car or paying for a needed home repair. The emergency fund not only allows you to cover these expenses, it also gives you the peace of mind to deal with these types of financial emergencies. Not having an emergency savings fund is one of the main reasons that many individuals borrow money at high interest rates.

How do I find money to save?

It is estimated that Americans take out $2 billion a year in payday loans at interest rates that average 300 to 500 percent. The question is often: “How do I find money to save?” There are several places to find money to save. Start with the loose change that many people accumulate. Americans typically save more than $100 in loose change each year. Use this change to open a savings account. If you receive a tax refund, use a portion of this money to begin or increase savings. Try to deposit money saved by cutting back on small, unnecessary expenditures. Track your spending for a month to identify any spending leaks. Cut back on meals eaten out and daily coffees. You don’t have to eliminate them entirely, but cutting back on two lattes a week can save you $360 in a year. If the average lunch eaten out costs $8, reducing that by two days a week can save $832 annually.

Involve your whole family

Building an emergency fund may be easier if you involve your whole family in meeting this challenge. After you’ve explained the importance of emergency savings to your spouse or children, they may have creative ways to help
accomplish this goal.

Automatic savings is the easiest way to save. What you don’t ever see, you may never miss.

Another way to accumulate an emergency savings account is to have the funds automatically deducted by your employer, if they offer that option, or have your bank or credit union automatically transfer funds from checking to savings monthly.

Questions? Contact Sharon Treen, UF/IFAS Extension, Flagler County Director

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