Alicia Nelson-Bell, HCHC
While experiencing times of high inflation and after spending the last couple of years in a pandemic, it is more important now than ever before to make sure that you have money in your emergency fund. Notice I didn’t say if emergencies happen, but when. According to a recent survey, 36% of Americans reported withdrawing from their savings accounts in the first half of this year to help keep up with the rising costs of the goods and services in the midst of high inflation. As you could imagine, during that same time period, the personal savings rate has fallen by almost 3% from what it was in December of 2021 to only 5%. Take this as your personal reminder to keep/begin contributing to your emergency fund, so you don’t find yourself stressed out and taking on new debt when bumps come up in the road of life, no matter how hard it may seem.
One of the action items for this month from our 2022 Finance Calendar is to increase your emergency fund contribution by $10. This means if you find yourself like many Americans who aren’t currently contributing to their emergency fund, put $10 in this month. If you are currently making monthly contributions, increase it by $10. This can help build or replenish your emergency fund even quicker.
A couple of tips to help with this:
*Make the decision once and then set up an automatic deposit/transfer- This takes the discipline out of having to remember to transfer money from one account to another. Also, no more “hoping that there’s some leftover at the end of the month to save.”
*Evaluate your habits- See if there’s something you’re spending money on that you could cut back on in frequency or cost. For example, if you get your favorite treat or drink every day, see if you could make it at home for cheaper or do without it a couple of days in the month.
*Save a portion of your raise- If you’re one of many who have received a raise recently, put $10 of it into your emergency fund.
*Something in savings is better than nothing “when life happens”- No matter where you find yourself able to start with contributing to an emergency fund, start now! I don’t know about you, but I'd rather have some money saved up when I have an emergency.
Even though high inflation is wreaking havoc on all of us, it is more important than ever to have at least some money set aside for emergencies. Start where you are and work on increasing your contributions over time and the money will just keep on growing.
O’Brien, Sarah, with inflation running at a 40-year high, 36% of U.S. adults tapped their savings to cover living expenses: Survey CNBC, Aug 11, 2022. inflation-has-caused-more-than-a-third-of-adults-to-tap-their-savings.html
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