In Case of Emergency: 5 Tips to Boost Your Savings
It never hurts to prepare for the worst. Here are some tips for building an emergency savings fund.
It’s not fun to ponder, but one day you might face a costly car repair, a sudden job loss or unexpected illness. Forty-four percent of adults surveyed by the Federal Reserve said they could either not cover a $400 emergency expense or they would have to sell something or borrow to cover it. [1]
“The current average savings rate of around 3 percent is much too low to provide households with short- or long-term economic security,” says Jim Benedict, a senior wealth planner at PNC. “Over the short term, most families need between six months and a year of expenses in cash to cover economic emergencies. The low savings rate and high spending rate we’re seeing now means many don’t have that cushion.”
Saving money can feel like a luxury, but peace of mind is priceless. Here are five tips to help you build up your savings in case of emergency.
- Start today. There’s no time like the present to start saving, and consistency is key. Establish a regular habit of setting aside money. Small but consistent deposits can add up to big funds in the future.
- Pay yourself. Treat savings like a line-item in your budget just like you would groceries or rent. Pay yourself by routinely tucking money away when you’re paying other bills.
- Set it and forget it. It’s harder to spend money that’s never in your wallet. Setting up direct deposits or transfers into a savings account can help you get in the habit of saving because it relieves you of having to actively choose to save the money.
- Nix transfers. It’s smart to keep some of your savings in an account that’s accumulating interest. That way, you’ll think twice about transferring money out.
- Save the extra. If you get a raise, don’t spend it; if you refinance your mortgage, stash the savings; if you get a tax refund, put it away. It’s easier to save money you’re not used to spending.
Learn more about how PNC’s Virtual Wallet ® can help you budget and save »
Jim Benedict is a senior wealth planner at PNC
Did you know?
More than half of millennials say they do not have an emergency fund according to a recent PNC Investments survey. [2]
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Important Legal Disclosures & Information
1. The Federal Reserve, “Report on the Economic Well-Being of U.S. Households in 2016,” 2017
2. PNC Investments, “Millennials & Investing Survey,” 2018
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