A car repair.

A broken appliance.

A health scare.

A job loss.

All of these things have something in common – they can cause financial hardship if you don’t have an emergency savings account ready to help.

It’s recommended that a person has at least three to six months of expenses saved in a separate “for emergencies” account so an event like one of those mentioned above won’t cause you terrible financial strain.

According to a 2022 Federal Reserve report, only 54% of U.S. households said they had savings set aside in case of an emergency.¹ With inflation and higher interest rates working against families at the moment, putting money aside has become much more challenging.

Yet, having a simple savings plan is still very valuable. Sure, you may need to adjust the amount you save to fit the moment, but saving something – even if a small amount – is better than saving nothing at all.

Here are some tips for growing a savings account:

• Automate it - schedule a transfer from your paycheck each month to go into a separate savings account.
• Review your expenses - is there anything you could cut out? Examples include expensive coffee drinks, eating out, streaming subscriptions, etc.
• Shop local - check out your local farmers' market for fresh produce.
• Change how you relax - take a “staycation” instead of traveling and save the difference.
• Save energy - lower your utility bills by turning lights off, grilling out instead of baking, and closing shades during the summer to keep your house cooler in temperature.

Find a savings strategy that works best for you and your family. No matter how you save, the ultimate goal is the same – to have emergency funds set aside for the unexpected to give you a needed financial safety net. Contact me at stamp.geoff@principal.com for more information.

Source:

¹ Board of Governors of the Federal Reserve System. (2023 May). Economic Well-Being of U.S. Households in 2022.

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