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Do You Have Emergency Funds?
I was at my bank the other day and there was an easel sitting in the lobby with a sign on it that asked, "What percentage of people have emergency funds? Ask you teller." So I asked my teller and was told that only 47% of people have emergency funds. I thought that figure was a little high and asked what amount of emergency funds was used as the criteria for the basis of that figure. I was told they didn't really know.
I next happen to see an on-line article by Kerri Anne Renzulli in the Money section of Time, based on a report by Bankrate.com that indicates that only 38% of Americans have enough money saved for an emergency such as a $1,000 emergency room visit or a $500 car repair. The author indicated, "What's especially troubling about the Bankrate results is that for many Americans the $1,000 and $500 figures in the survey are far less than the minimum of three to six month's worth of living costs financial planners recommend people have in emergency savings. That means that even more than 62% of people are unprepared for a big crisis like a job loss."
As usual, this got me to thinking. You don't have to be a Prepper or a Survivalist to be concerned with these figures. It used to be that Americans were savers. They always tried to put away something for a rainy day. Then with the advent of the entitlement society so prevalent today, many became spenders, and with our government as an example, borrowers. If you can't afford it, well then you still deserve it, so borrow (read charge cards) for those things you need.
The problem with this mentality is that there is a difference between Wants and Needs. Until our society returns to the belief that you only deserve what you can afford, people will continue to go in debt for those things that are not Needs but Wants. The next time you think you need the newest smart phone, flat screen television, bigger tires, or the newest sneakers, ask yourself if you were laid off the next day, do you have enough emergency funds put away to pay your bills for a couple of months.
I have found that many people don't even have minimal emergency funds. I don't mean three months worth of non-discretionary expenses like rent or mortgage payments, utilities, or health insurance, but money to buy food or gas. They live from paycheck to paycheck. For some, there is no other way, but I am always surprised that some of these people always have the newest phone, or other type modern convenience.
So what can we do? Is there a way that anybody or everybody can work on having some emergency funds?
It may sound like a cliché, but when I was a child we always had a small coffee can on the top of the refrigerator and it contained cash. Change, dollar bills, or whatever we could do without. It was used when funds were low. We didn't have charge cards and my Father didn't believe in having credit at stores. If mom needed milk and we were low on money, she would go to the coffee can and I would be on my way walking over to the country store for milk.
This is something almost anybody can do. It is also handy if for some reason the banks were closed for any period of time. Having some cash on hand is part of any emergency plan. If the electricity is out ATM's and charge cards will be useless. However, instead of using a coffee can as we did in the past, I recommend having a small fireproof container such as a small "Sentry Safe." They are available in many sizes and in the event of a fire, you will still have your emergency funds.
Put away your change, or even a couple of dollars each week. Increase the amount when you can afford it. If you get an unexpected influx of money, like a tax refund, share some with your emergency funds. I know of so many people who have their tax refund spent before they even get it. Try not to be one of those. If it isn't something you really need, then weigh your options carefully. Will a new "something" be as valuable to you in an emergency situation as some cash?
DON'T CHEAT ON YOURSELF
The emergency funds you squirrel away are for emergencies. Again, try not to let your wants get in the way of your needs. You will only be cheating yourself. If, or when, a situation occurs where you will need to rely on your emergency funds, you will be glad you have them. These funds may make the difference between making it through a bad situation or not.
Be true to yourself and don't let your emergency funds burn a whole in your pocket. Don't think about it as extra money that you can use to splurge. It is there for a reason and unless you have an emergency, try to forget you have it. This is hard for some people, but you must have discipline and restraint. If you give in to mere wants you will never have emergency funds.
GROW AS YOU GROW
As your financial position gets better, you should obviously increase your savings. You should always maintain your emergency cash, but you might want to start a savings plan that would allow you to pay your non-discretionary expense for a month, then two, and even three.
Think of all the people who have been on unemployment now for several years. It can happen! As we all know, there are many aspects to emergency preparedness. Money is one of them. Give serious consideration to starting a savings plan no matter how small. It may just be the one area that has been ignored too long.
We hope you enjoyed this article and will help support our efforts by checking out our products. As always, Be Prepared To Survive!
Copyright © 2017 by John D. McCann