What would you do if you received a $1,000 medical bill in the mail? Unfortunately, most Americans would find themselves in the red. That’s because a majority of Americans don’t have the cash to cover an emergency.
WTNH reports that news comes as a shock because of declining unemployment and rising salaries. However, it proves that America still struggles to pay bills. In the case of a broken bone or leaky roof, most Americans will struggle to pay for it.
A meager 39 percent of Americans say they have the money to cover a $1,000 emergency. This study came out of Bankrate, a financial services company.
Bankrate also announced that over a third of all American households experienced an unplanned expense. The average cost of the unexpected emergency bill? $2,500.
On top of that, they found one in five Americans would pay using a credit card. Unfortunately, that only makes their bills higher depending on their interest rates.
Greg McBride, chief financial analyst at Bankrate, firmly recommends every American set up an emergency funds account.
“Having that emergency savings fund will help you sleep at night before and after that unplanned expense.”
To do that, he urges people save at least six months of living expenses to cover the brunt of the emergency bill. He also says every little bit helps. So, just put aside a responsible amount of money aside every month to begin saving.
McBride also says should you find yourself unexpectedly out of a job, the funds will provide some cushioning.
So, in order to help put aside money, he recommends directing a portion of each paycheck into a savings account. As soon as your paycheck comes in:
“Too many people try to save what is left over at the end of the month only to find out there is nothing left over. You have to flip the equation around: save first, then spend what is left over.”
Since saving money takes a long time, he urges all of us to start as early as possible. Meaning: if you have kids, might as well teach them the power of saving money.
In addition, McBride says putting that cash in a separate bank account reduces temptation to spend it. Since he’s talking about saving accounts, here’s his final word of wisdom.
Shop around and find the best savings account you can. He personally recommends online banking accounts, but if you don’t wish to do that… find a bank with the highest rates.
Do you have enough money to pay for a $1,000 emergency bill? Do you find it easy to save money? Share your money saving secrets below!