American Consumer Credit Counseling Explains How to Start and Build an Emergency Fund
When it comes to unforeseen emergencies, the best defense and readiness tool is a household fund explicitly established for emergencies and unplanned events. To help consumers, national nonprofit
"Unfortunately, emergency expenses – whether they be home, car, medical or something else altogether – can arise very quickly and usually need to be dealt with immediately," said
According to a recent survey by Bankrate, 34 percent of Americans have experienced a major unexpected expense within the last year. To cover the cost of an unexpected expense, 39 percent of respondents say they would take money from their savings, 19 percent say they would finance with a credit card and pay it off over time, 13 percent say they would reduce their spending on other things, 12 percent say they would borrow from family or friends ,and five percent say they would take out a personal loan.
When starting an emergency fund, consumers should aim to save at least three to six months' worth of critical living expenses to use in case of emergency. Building an emergency fund to cover 6-9 months' worth of expenses is ideal. Critical living expenses include bills, such as mortgage and rent, food, utilities, insurance, transportation, child care, and minimum payments on credit cards or loans. Once consumers decide how much they need to save, they should set funds aside in a separate account – other than regular savings – that earns interest.
With several ways to build an emergency fund, it is essential for consumers to find a way that works best for them. Some helpful tips include:
1. Automatically transfer funds from each paycheck – If consumers never see the money, they won't have a chance to miss it and will always remember to contribute.
2. Aim to save five to 10 percent of every paycheck – If a consumer's budget allows, they should set aside a certain percentage of each check to their emergency fund.
3. Cut back on unnecessary expenses – Consumers should use the
4. Allocate any extra money to the emergency fund – Consumers should put any extra cash left over from their budget, side jobs, or any other unanticipated income directly into their emergency fund.
5. Be patient – Emergency funds can be slow-building. Even if consumers only contribute
- For credit counseling, and student loan counseling call 800-769-3571
- For bankruptcy counseling, call 866-826-6924
- For housing counseling, call 866-826-7180
- Or visit us online at ConsumerCredit.com
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Read the full story at http://www.prweb.com/releases/2018/04/prweb15398511.htm
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