At Clearview, our primary concern is for your health and the health of your loved ones.
Certainly, physical health is at the top of everyone’s mind today, but even during these uncertain times, it’s important to tend to your financial health as much as possible. There’s no better way to protect your personal finances than to establish an emergency fund.
Run the numbersAn emergency fund is most commonly defined as liquid cash to cover necessary expenses for six months. This includes costs such as rent or mortgage, taxes, utilities, insurances (auto, home, and health), existing debt payoffs, transportation (including vehicle registration and inspection), and groceries. But that number is a goal, not a plan. If you don’t have this amount saved, you’re not alone. According to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households published last May, approximately 40% of adults would not be able to pay off an unexpected $400 expense at all, or not without borrowing or selling something. So how can you start saving?
Make a planInstead of feeling overwhelmed by a daunting goal number, look at your current expenses and make a budget. Then consider what can be converted from an expense to a saving:
- Install a good quality water filter vs. buying bottled water
- Bundle up vs. turning up the thermostat
- Brown-bag lunch or make dinners vs. ordering out
- Select a favorite streaming service vs. an expensive cable package
- Purchase books vs. video games
- Brew morning coffee at home or at work vs. café or delivery-service coffee
- Use personal free weights vs. a gym membership
- View new movies online vs. going to a theater
Open a separate accountAn emergency, by definition, requires immediate action. Your emergency fund should be a separate account that can be immediately accessed. Ask for an account with a low minimum balance, no monthly maintenance fee, and FDIC insurance.
Save automaticallyDirect deposits and automatic transfers are your friend. Everyone’s busy. These services make saving effortless and non-negotiable.
Found moneySavings are built, not discovered. Even the tallest brick structure was built one brick at a time. Persistent, cumulative action is the best way to build your emergency fund. Here are a few ways to generate one-off boosts to help grow your fund:
- Buy certified-used, refurbished, or gently used items vs. new
- Sell items you’re not using
- Donate items you’re not using and claim them towards your itemized deductions at tax time
- Save a portion of your tax refund, if you receive one
- Use coupons — both clipped paper ones and digital codes