Americans Are Behind on Emergency Savings. So Why Aren’t They Worried About It?

Because none of us are immune to unexpected bills or periods of financial upheaval, we must have emergency savings on hand to protect ourselves from the unknown. How much money do we need to sleep well at night? In most cases, six months’ worth of living expenses in the bank should do the trick, with three months’ worth being the minimum most of us should strive for.

It’s unsettling, therefore, to learn that 45% of Americans don’t have that three-month cushion, while the majority of Americans don’t have six months of expenses tucked away. In fact, only 29% of U.S. adults have enough money in the bank to cover six months of living expenses, according to a new Bankrate study. Meanwhile, 22% have less than three months of expenses socked away, and 23% have no emergency savings at all.


But while you’d think those lacking in savings would be stressed about it, they’re disturbingly content with what they have. A good 62% of U.S. adults say they’re actually comfortable (either “very” or “somewhat”) with their level of savings, as per the aforementioned study. And that can only mean one thing: They’re not going to take steps to increase their cash reserves, even though they’re sorely lacking at present.

You need a solid emergency fund

Financial surprises (not the good kind) can creep up on us at any time. You might get hurt and incur a whopping medical bill out of the blue. Or, you might lose your job and suddenly find yourself without an income for months on end. Without a solid amount of cash reserves, however, you’ll probably have no choice but to resort to credit card debt to keep up with your obligations, and that means kick-starting a vicious cycle of accruing interest charges and damaging your credit score in the process.

And that’s precisely why you need a reasonable level of cash in the bank, even if you’re convinced an emergency will never happen to you. You just never know what the universe has in store for you, and the sooner you take steps to protect yourself financially, the less you’ll risk damaging your finances irreparably.

Building your cash reserves

If you’re among the 45% of Americans with less than three months’ worth of living costs in the bank, you just plain need to start saving. You can start by examining your budget (or creating one if you don’t have one yet) and hand-picking a few expenses to slash. Maybe you’d rather continue spending money on meals and entertainment, but are willing to get a cheaper apartment to cut down your rent. Or maybe you enjoy a larger living space, but are amenable to getting rid of your car and unloading its associated monthly payment and insurance costs. It doesn’t matter which expenses you choose to reduce — in fact, it pays to pick the ones that will impact your quality of life the least — as long as you’re cutting corners somewhere.

Another thing you might consider if you’re really behind savings-wise is getting a side hustle. Whether you’re able to squeeze in just a couple of hours of extra work per week or an impressive 10 hours or more, any extra money you bring in is cash you can use to fund your emergency savings, since it won’t already be earmarked for other purposes. Incidentally, that side gig can buy you some protection in the face of a layoff. If you lose your job, you’ll have some cash coming in as you search for a new one.

Finally, be sure to take any additional money you come into, whether it’s a bonus at work or a birthday gift from a relative, and stick it into your bank account. A few hundred dollars here and there will get you to your savings goal more quickly.

We never know what life might throw at us, which is why we all need savings. If you’ve yet to amass three months’ worth of expenses, consider this your wakeup call.

Even if you already have three months of living costs in the bank, you should still strive to hit that six-month threshold, and while you perhaps don’t need to get quite as drastic with cutting expenses, you should still make an effort to lower your spending to some degree to free up more cash to put in the bank. The more savings you have, the more protection you have — and that’s reason enough to push yourself to do better.

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