Build yourself a safety net with emergency savings
If you're like many young Americans, a large chunk of your income goes toward paying down debt such as student loans and credit card payments. Paying off debt as soon as possible is a smart move — it can help you save on interest payments and improve your credit score. However, neglecting to build an emergency savings fund can be a potentially dangerous oversight. A financial cushion can see you through rough patches like a job loss, medical emergency or car repairs.
What if a couple of crises happen all at once and you don't have enough cash to float you through? You might be forced to take out a loan, increase your credit card debt or dip into your retirement fund.
Resorting to any of these options could end up costing you more than if you had just kept building up your emergency savings over time.
How to build your rainy day fund
Financial experts suggest having three to six months of living expenses in emergency savings. This includes food, rent, insurance and other necessities. If you're single and don't have kids, this can be a few thousand dollars. If you're a married homeowner with children, you'll need much more.
Try these tips to boost your savings over time:
- Keep a record of your spending. Set aside money from your paycheck for your essentials, and then eliminate things you don't need, such as a daily latte or an overlarge cable package. Put that extra money into your savings!
- Set up an account with direct deposit so part of your paycheck automatically goes into your savings. Don't wait until the end of the month to try to scrape together whatever is left; there might not be anything left to save.
- Find a way to make money on the side, such as taking on a part-time job, a couple of shifts at a restaurant or freelance gigs.
We can help
Building up your emergency savings is well worth it for the peace of mind it brings! If you have questions about how you can maximize your savings potential and build emergency savings, visit one of our branches or call us at 1-800-288-3425.