Emergency Savings: What for? To help you in an emergency, of course!
By Kate Vaillancourt, Certified Credit Union Financial Counselor (CCUFC)
If your car needs repairs, can you afford to pay the bill? Do you have the money to pay for a night in a hotel if your home has flooded or had a gas leak? What if your power goes out for too long and you need to replace your food supply? Would you need to use your credit card to pay for any of these unexpected expenses? If so, can you pay that credit card off the following month?
If any of those questions made you grimace or want to count out the change in your cup holder, you may benefit from an emergency savings account.
I know I risk losing my audience by throwing out statistics, but according to the Making Ends Meet Survey and Consumer Credit Panel from the Consumer Financial Protection Bureau (CFPB) conducted in 2022, 24% of Americans don’t have any money saved for emergencies and 39% reported having less than one months’ worth of income saved. Statistically speaking, this could be you. Most experts suggest having three-to-six months worth of expenses in an emergency savings account. Ugh – that’s a lot of money!
Trying to find a way to stash away that much cash can be overwhelming — so overwhelming, that you may think there is no point in even trying. Believe me, I get it. Putting money away is HARD. Groceries are expensive, utilities keep going up and there’s a grandbaby that needs spoiling. (OK, that last one is just me, but you get the idea.) Life has gotten expensive and it’s not getting any cheaper, so planning for hard times is more difficult than ever!
While saving money is hard, paying off debt is even harder. If your current plan for emergencies is to rely on your credit card, you may consider opening an Emergency Savings Account.
The average interest rate on credit cards in the United States is 21-22%. Don’t ever think the big credit card companies are your friend. They like you for YOUR MONEY that you pay them every month. Thankfully, Acadia FCU offers a much better rate than that, but we don’t want to see you getting into debt with us, either. Unlike the big banks, we are here to help.
So, start small if you need to – but adding an extra savings account is quick, easy, and there is no minimum balance required with us when added to your existing account. Try to contribute a little to it each payday and (hopefully) there will be funds to help you out if you have an unexpected bill come your way.
If you struggle with the discipline of putting money away each month, ask an Acadia FCU loan officer about our Score Saver loans. While they are intended to help build or rebuild your credit, they can also be used to help you put money away over the course of a year.
Most of all, don’t beat yourself up if you don’t have all that money put away immediately. Start with a small goal and once you reach it, make another one. These things take time. Just remember that you are doing something, and something is better than nothing — especially when it helps you down the road. You can do this, and together, we will!
If you would like more information on how an emergency savings can help you, please contact me directly by calling (207) 992-1060 or sending an email to kvaillancourt@acadiafcu.org. I’m here to help!
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March 15, 2024