43 F
Indianapolis
Friday, March 29, 2024

People lack emergency funds

More by this author

Could you come up with $2,000 in emergency funds in 30 days?

According to a new study by the National Bureau of Economic Research, half of all U.S. households say they “certainly” or “probably” could not come up with the funds to handle this type of blow to their budget.

Beth McClellan is the relationship manager at Flanner House, an organization with the mission to support the nearby community by providing such services as early childhood education, senior services and financial assistance.

Especially in the neighborhoods that Flanner House serves, she said that the people she assists could not come up with the funds.

“It would take several months to come up with $2,000,” McClellan said. “People have to come up with alternative means. They rely on public transportation and realize the importance of friends and family.”

Unfortunately, the types of emergencies requiring $2,000 are not uncommon; it’s the price of a medical bill, major auto repair or home repair that Americans face daily.

It is also lower than the three to six months’ worth of expenses that financial planners typically recommend people have in savings accounts.

However, the lack of emergency resources may affect more people than you think. Lack of savings is not just a problem of the impoverished, but also affects many “solidly middle-class” families.

Still, 28 percent of respondents said they “certainly” would be unable to handle a $2,000 expense, while 22 percent said they “probably” would be unable.

McClellan said that for the people she assists, a savings account is “pretty much a luxury.”

“College education savings don’t happen,” she said. “A car is important, especially when you have a job.”

With the status of the economy, and countless people’s checking accounts, being uncertain and fragile, many Americans’ savings have been the first things to go.

Now, with the unemployment rate beginning to lower, Americans can begin to pick up the pieces on their savings.

Jonathan Owens, a financial advisor at WestPoint Financial Group, said saving begins with having a goal.

“If there’s no goal, there’s no point,” he said. “Along with goals, you have to have a written plan for how and how long. Having to implement that plan is where a lot of people get caught up. Also, is anyone keeping you accountable?”

In addition to having goals and being accountable, Owens said that the goal needs to be realistic. He suggests not setting aside a large amount each week, but rather 1 percent to 5 percent of your income.

“Don’t be scared to do it slowly. Clients will want $2,000 and will take a year to do it,” he said. “You have to create a plan that will not change your lifestyle. If it dramatically changes your lifestyle, it’s the first thing we’ll quit.”

Finally, Owens said that saving means having to make sacrifices. Some of the first things he asks his clients are “is this a priority?” and “how important is saving to you?”

“Everyone knows what they should be doing, but if a new pair of Jordans (sneakers) and going to the bars are more important, then that’s where you’ll put your money,” he said. “Are you willing to sacrifice a little?”

 

- Advertisement -
ads:

Upcoming Online Townhalls

- Advertisement -

Subscribe to our newsletter

To be updated with all the latest local news.

Stay connected

1FansLike
1FollowersFollow
1FollowersFollow
1SubscribersSubscribe

Related articles

Popular articles

Español + Translate »
Skip to content