Only about 40% of Americans have enough money in savings to cover a $1,000 emergency room bill or car repair–that’s according to a new study from bankrate.com.
“Car repair, medical, maybe one of their kids teeth got broke,” Phil Helton said.
Helton knows how easily unplanned bills can come up.
“There’s always something unexpected that comes up, always, if you have $1,500 saved up, something will come up that costs you $1800, that’s just life,” Helton said.
“Those unforeseen emergencies, a hail storm, a car wreck, whether its a $500 or $1,000 deductible, a lot of people have to turn to other sources because they don’t have the savings readily available,” Ryan Anderson, a Registered Representative with Mutual of Omaha Investor Services said.
The bankrate.com study found adults under 30 struggle the most with saving for emergency expenses and at least a quarter of adults saw a major unexpected expense last year alone.
“Saving is very important for everyone,” Anderson said. “And having that savings gives you the permission to do what you need to do.”
Anderson says its important for everyone to have a special account set aside for true emergencies.
“Not somewhere it can be easily spent or with the swipe of a debit card it can be gone,” Anderson said.
If you don’t have an emergency savings set up yet, Anderson suggests meeting with a professional to help reach your financial goals.
“You can google things, you can look for advice on the internet, but typically you see the best results when you work with a professional who can really coach you and hold you accountable,” Anderson said.
If you’re just starting out, don’t set unrealistic goals. Start small and stay within your budget.
“If it’s cutting out Starbucks two times a week and then putting that money aside every week, and then watching it compound over the course of a month, over the course of a year, and anything you can do to automate that saving will help,” Anderson said.
“Cutting out stuff that isn’t a necessity,” Ben Endorf said.
Endorf says it takes planning to make sure his family is covered for emergencies.
“I think doing a budget, starting with a budget get your plusses and minuses in order, figuring out what you’ve got for bills for the month, what’s going in and then you can start putting things away,” Endorf said.
“Nickle and dime it and put back what you can, but there’s a lot of people who can’t,” Helton said. “Its taken me many years to get me where I’m at.”
Anderson says how much you should have saved up in your emergency fund varies depending on your situation. He says a general rule is to have enough saved up to cover three to six months of your regular bills.