Save for Emergencies

Building an emergency fund is the top goal of American Savers. Nearly a quarter of savers who have pledged to save locally or nationally have chosen “emergency savings” as their first wealth-building goal. An emergency savings fund consists of a small amount of money, usually in a savings account, that you do not have easy access to. Saving for this fund starts with small, regularly scheduled contributions that build up over time.

Emergency expenditures can range from the bill for an unexpected car repair to living expenses that are tough to cover because of a layoff. According to a Federal Reserve Board survey, the typical low- and middle-income household says it desires $3,000 in "precautionary savings." However, an emergency fund of as little as $500 can make a difference. One research report showed that low-income families with at least $500 in an emergency fund were better off financially than moderate-income families with less than this amount.

Emergency Savings Research

  • According to one survey, the typical low-to-moderate income household said it desired $3,000 in "precautionary saving." But the median financial assets of these households, including retirement savings, were only $2,700. 
  • Furthermore, a December 2012 Consumer Federation of America survey found that only 37 percent of low-to-moderate income households had a savings or money market account at a bank or credit union. And the median (mid-point) amount in this account was less than $1,000—$700 for low-income households (lowest-income quintile) and $1,000 for moderate-income households (second-income quintile).

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