Do You Have at Least $1000 Saved for an Emergency?
Most personal finance “experts” would recommend that everyone have at least $1000 saved in an emergency fund. In reality, you’ll need more, but $1000 is a nice round number. And you need somewhere to start. Considering that less than 40% of Americans could cover a $1000 emergency expense, it’s even more important that you complete this first step.
So where to begin? It can seem overwhelming at times. There can be so much information out there that you start to get paralysis of the analysis. You’re like a deer in the headlights. Or like a squirrel on the road. Sorry, I got caught up in my metaphors for a second. But, it’s true! The feeling of helplessness and anxiety is very real. And it can leave you paralyzed, which sometimes is worse than doing the wrong thing.
So, if your savings account is running on empty, and you’re ready to start, read on.
Start With an Online Savings Account.
One of the problems and probably the most widely used excuse that I’ve heard for why a person doesn’t have a $1000 saved is that they needed it for something else. Something came up, and so they spent what they had. And something always seems to come up. The kids need shoes. You need to change the filters in your furnace or ac unit. And the car needs a new battery. Sometimes all in the same month!!
By the way, I just replaced the battery in my 12 year old car. And the store that I went to only had two options in stock. They had a platinum battery for $230!!! And they also had a gold battery for only $175!! WHAT??!!? When did car batteries become so expensive? Of course I settled for the gold version. My car isn’t classy enough for a platinum battery, haha.
But something will always come up. And having a car with a dead battery can become an emergency real quick. For me it wasn’t an emergency. I was able to pull out my debit card and cover it. It was painful. Because who wants to spend $175 on a battery??!!??
But to combat this issue of something coming up, make sure your savings account is entirely separate from the bank where you do your checking. You need to make this money a little bit difficult to access, in order to keep it for actual emergencies.
I recommend an online savings account. I’ve touted Ally, Capital One, and CIT Bank’s online accounts before. They are easy to set up, and you can link them with your checking account. You do want to be able to put money in easily, you just don’t want to be able to spend that money on a whim.
Start Funding Your Freedom.
The next step is to start putting money in your new account. Even if you only start with $100, and add to it slowly, that’s something! Don’t underestimate the power of even small actions. Just putting $10, $20, or $50 a month away is a great start.
If you started with $100, and added $50 to it each month, you’d have a $1000 saved in 18 months. And of course the more you can put in, the faster you’ll reach that $1000 plateau. If you can set it up so that your employer automatically splits your paycheck, and diverts a set amount to your savings account each paycheck, that’s fantastic! You can learn to live on the smaller pay, and in the meantime, your savings will start to build without you even feeling it.
I think you’ll find that over time, you won’t want to spend that money that you’ve saved. You’ll start to change your attitude towards different things that come up. What used to be an emergency will become simply an inconvenience. You’ll want your $1000 saved to only be used for a real emergency. You may never spend it. And that’s ok. Having that money there gives you a feeling of security. Because you know it’s there if you truly need it, and that is freeing.
No longer do you have to stress about what might happen. When is the car going to die? And when will the hot water heater break? You now have a safety net to help when those things do eventually happen.
If you don’t have at least $1000 saved in case of . . . something, you’re normal. Most people are broke. But that’s not where we want to stay. Because normal sucks!!
Open up an online savings account and start funding your first $1000 today. Start small and build your saving account. Taking action, even small actions, is more important than doing nothing. You’ll be glad you did.
And once your reach that $1000 plateau, don’t stop. Build your saving until you reach a fully funded emergency fund. You should aim for a month’s worth of expenses to start, and then 3 month’s worth. You’ll get there. But you have to start.
Do You have at least $1000 saved? If not, why not?
Let me know in the comments if you do. I’d love to know how many of my readers are in the minority (less than 40%) of Americans that could cover a $400 expense. Thanks for reading and sharing.