In life, we expect that things will not always go smoothly. Unfortunately, it’s a reality that emergencies do happen, and the best thing we can do is be prepared for them. However, many Americans are not as prepared as they think when it comes to coping financially with an emergency. So how much money do you really need to set aside to ensure that you’ll be prepared to cover emergency expenses?
According to an analysis conducted by JPMorgan Chase Americans should be setting aside about six weeks of pay to weather the costs of an emergency. This figure is actually substantially less than the 3-6 months that many have traditionally recommended. While that may come as somewhat of a relief, it turns out many Americans actually aren’t even setting aside that.
Many of us are actually completely unprepared to pay for unexpected costs. According to the AARP, 53% of households don’t have an emergency savings fund at all. This means an emergency for more than half of American households would be financially disruptive and depending on the scope of costs, potentially ruinous. This is why, regardless of your income bracket, it’s important to be aware and start making plans for an emergency fund.
Many employers are also recognizing the ramifications of having employees under-prepared for emergencies. Because of this, some employers are now offering programs where their employees can have a portion of their income set aside monthly for an emergency fund, and providing matching options. But whether your employer offers such a service or not, it’s important to have a fund that you’re contributing to regularly to ensure that an emergency won’t be too much of a financial burden to bear.
If you’re concerned about your emergency funds and need some guidance, or if you’re interested in learning more on how to build an emergency nest-egg, let us help! For more information contact us today.