The Lack Of Personal Savings in America is Troubling
The personal savings accounts in America are bone dry. Most people have $0 in a savings account! This is a very scary situation to be in, now of course this doesn’t mean that the average American has no savings – that would be ridiculous. But what this does mean is that if something unexpected were to happen many people would not be able to get it fixed right away.
47% Americans Can’t Cover a $400 Emergency
Because your savings accounts aren’t funded this means that most of people’s liquid cash is on a checking account. However, this money is usually just enough to cover their living expenses and not much – if anything – else. So if their water heater just broke (mine just did and it was just over $700 for a new one and installation!) then this could put them in a hard spot financially. I have seen this first hand over the years and it’s sad because it’s so easy to not be in this position.
In order for most people to be able to afford this they would have to pull their money from a less liquid source such as an investment account or 401k, or borrow the money. While this isn’t the worst thing for a lot of people, many don’t have any extra cash to spend on this so it really boils down to budgeting for “life happens”.
How To Build A Savings Account
A savings account is just like an emergency fund. In fact the two can be one in the same, but building up a savings account really isn’t a surprise. Just put some money into it every pay check or so. It’s best to do little amount that you wont miss, like $10 or $15 here and there.
These small amounts of money add up fast so when the car breaks, or furnace goes out you can pay for it and not even think about it.
One of the best ways I found to save money and not get the urge to spend it is to open up a separate bank account at a bank you never go to. Then set up an automatic transfer for whatever amount you want, I did $25 a week.
Also don’t keep this account on any of your finance trackers like mint or YNAB this way you forget about it – until you need it.
However this is really a lot of work, I now use Digit instead of this method because it’s the same thing but better and easier.
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