Are You Prepared for the Unexpected?

In today’s consumer driven world, finding the will power to set aside money for an emergency fund can be all but impossible, especially when faced with a sky-high stack of bills every month.   

Too often we forget that an emergency savings fund can safeguard us in times of uncertainty and can provide us with a sense of security. According to the National Foundation for Credit Counseling, nearly a third of Americans do not have an emergency fund, and 57% of those that do, don’t have enough in it. If you fall into any of these two categories, it might be time to revisit your spending habits.

Getting out of debt is only the first step towards a financially secure future. By contributing towards an emergency fund, you can be assured that in the event of a job loss or medical emergency, you won’t have to reach for your credit card, restarting the dreadful debt cycle all over again.

It is generally recommended that you save at least three to six months worth of living expenses. However, in an economy such as todays where finding employment can be difficult, you should aim toward saving six months worth of expenses.  

According to the Bureau of Labor Statistics, El Paso’s unemployment rate was at 9.3% for the month of May, putting the number of unemployed El Pasoan’s at 29,420. Nationally, employment declined by 125,000 in June.

Chart your expenses with a budget sheet to figure out how much you need to save and multiply that by 6. Expenses should include mortgage payments, property taxes, utilities, groceries, and insurance premiums.

The purpose of your emergency fund is not to make you rich. Consider depositing your money into a money market account or a high yield savings account. Don’t worry; your money isn’t going anywhere. EPEFCU is federally insured by NCUA up to at least $250,000 and ESI for up to at least $250,000.

So what is an emergency? Certainly not a beauty parlor run, even if your unruly hair is in desperate need of some TLC. Unexpected health emergencies that require a large deductible or a death in the family could qualify as emergencies and are the only reasons to dip into your savings fund.

Maintaining a savings fund can do more than just alleviate the stress of a rainy day however. According to a study conducted by the Consumer Federation of America, low-saving worriers were much more likely to say they lost sleep, suffered worse health, or were less productive at work than were high-saving worriers. Moreover, households with low liquid savings are more likely to have difficulty paying monthly bills, making mortgage payments or rent payments, bounce checks, take out high cost loans, and have impaired credit histories.

Improve you psychological health as well as your financial health by developing a savings habit. Know your net worth, have a spending and savings plan with goals and utilize free checking account features that will help you meet your goals.

Resist the urge to pull money out of your emergency fund and make sure that you revisit your fund once a year. Consider contributing additional funds if life events, such as having a new baby, have increased your spending.

Did your emergency fund rescue you from an unexpected event? Tell us! We want to hear you success stories! Or maybe you don’t have an emergency fund and would like to start one. It’s never too late to start and we want to hear about it! Feel free to leave your comments; we’d be honored to read them!