TULSA, Okla. — Whether its rising prices — job uncertainty — or unexpected medical bills — financial curve balls can at suddenly pop up at any time.
Setting up an emergency fund can make all the difference.
Consumer Reports says building that safety net might be easier—and more important—than you think.
You probably have Band-Aids in your medicine cabinet and jumper cables in your car to cope with life little emergencies, but do you have a financial emergency kit?
More and more Americans struggle to pay for basics like groceries, rent, and gas.
Even with unemployment low right now, Bankrate’s annual emergency savings report found 59 percent of Americans do not have the financial resources on hand to cover an unexpected $1,000 emergency expense.
The reasons given for not setting up emergency savings are not surprising:
- inflation
- high interest rate
- unstable income
Creating an emergency fund does not need to be scary.
To begin: Sit down and take a close look at your monthly expenses to find easy things you can cut like internet subscription services you no longer use, or phone or cable services you don’t need.
Now, calculate how much you’d need to cover three to six months of essential expenses such as housing, utilities, food, transportation, and debt payments.
Once you know your expenses, open a separate savings account just for your emergency fund, so you won’t be tempted to dip into it for everyday spending.
Your best bet to grow your balance is to put the emergency fund money into an account that earns a high interest rate or into a no-penalty Certificate of Deposit.
To make saving even easier, set automatic deposits or transfers from your checking account to your emergency fund. This will keep your contributions on track and secure until you need them.
And if you’re struggling with medical bills that hold you back from saving, Consumer Reports warns to steer clear of using medical credit cards or loans offered by healthcare providers to finance those costs. The loans and cards often come with high interest rates, and hefty penalties for missing a payment that could seriously hurt your credit.
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