A majority to avoid – those with no emergency fund!

Rise above the masses!

In the early to mid 1990’s a popular revitalization plan for many cities included the creation of a “mega-shopping mall” by connecting adjoining buildings and constructing climate controlled “tubes” spanning surface streets. I recall at least one city using the marketing slogan, “Rise Above the Masses” seeking to draw shoppers into the non-mall mall. While that slogan is questionable at best, there is one mass of which we hope none of our readers is a member, the mass of financially unprepared people of America.

64 percent…really?

In September of 2015, Jessica Dickler reported “Most Americans can’t afford a $1,000 emergency expense,” on CNN Money. The percentage most often cited is that 64% fail to have this set aside. In a time of rising healthcare costs and skyrocketing deductibles, that is a staggering number. The reason for the shortfall according to many surveys, family debt burden is too great to allow the accumulation of an emergency fund. This in spite of the fact that an emergency fund is possibly the single most effective tool in preventing the increasing debt burden!

Is there a perfect size for an emergency fund?

In short, no. However, there are parameters that many find acceptable. The most common response to the question is three to six months of family expenses. If yours is a two-earner family, you should have at least three months of expenses set aside in case of a job loss. A single paycheck family should lean toward the greater number. Other factors that impact the “ideal” size of a fund are health concerns, age of family automobile(s), state of home repair, etc.

Do not despair, your emergency fund IS within reach!

The level of frustration is enormous when a family cannot save because of debt already accumulated. They know the absence of the emergency fund means increased debt when the credit card is used to cover the next set of tires. Too often, the response is surrender. Why try? Here are four suggestions from GuideStone.org to help jumpstart the accumulation of your emergency fund.

Start small – work toward $1,000! When debt is an anchor on the family checkbook, thinking about saving three months of expenses is simply a goal too high.

Renegotiate credit card rates. Paying off the debt is the first step! Attempting to renegotiate rates is a place to start.

Increase the deductible on your auto insurance. Once you have saved sufficient funds to cover the cost of tire replacement, ask your agent for a higher deductible. Add the savings to your emergency fund…do not increase spending!

Stimulate savings through investment. The term investment in this instance is not stocks and bonds, but seeking higher interest rates! An emergency fund should not be in fluctuating markets, because it is for an immediate need. Compounding interest takes time to become impressive, but when the curve turns upward it is encouraging.

There is no time like today to get started!