A Federal Reserve study from 2019 has shown an alarming statistic: 40 percent of Americans do not have $400 in their bank account for emergency expenses. While this study was performed months before the coronavirus pandemic, it’s a startling reality at a time when people are losing their jobs because of the pandemic. While rebuilding your emergency fund can seem daunting or almost impossible, it doesn’t have to be the case.
If you’re looking to build an emergency fund, here are a few tips on how to get started:
Make changes to the way you budget. Usually when households retool their monthly budget to make necessary cuts, the first thing to cut is “fun money,” such as going to concerts, movies, happy hour events, or nightclubs. Because of COVID-19, most of those options aren’t available – so where do you find money to save for your emergency fund? For many families, this might be a difficult decision, but if you look closely at your bank and credit card statements, you might find unnecessary spending. One of the biggest budget killers, especially right now, is takeout; ordering from DoorDash or UberEats too often can cost you more than you realize.
Ask around about payment relief options. Of course, this is no guarantee, but since March 2020, we’ve seen utilities, cable companies, and even some landlords have provided payment relief – i.e. if you can’t pay your electric bill on time, they won’t shut off your power. Many companies have eagerly worked with customers who can’t make ends meet, and if you’ve lost income during the pandemic, or if you’ve fallen ill, these relief options could help you get from month to month.
Open a savings account or certificate for your emergency savings. It’s generally the best idea to put the money you saved somewhere safe, such as one of Polam’s Vantage checking accounts or one of our certificates of deposit (CDs). Our Vantage savings accounts are ideal for anyone who’s just starting to build up their emergency savings fund, and our CDs are a great choice once you have a good amount of savings. Visit one of our branches and we’ll help you make the right decision regarding how and where you save.