Tag Bankrate Emergency Savings Report

A Money Move Which Puts You At The Top

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According to financial expert Scott Galloway, getting into the habit of saving $100 each month is one of the healthiest ways to become financially responsible. By adopting this habit, you’re paying yourself first, and if you invest that $100 in a high yield savings account, the power of compound interest will boost your returns. “If you get used to saving just $100 a month…you’re immediately in the top 10% of most financially responsible people in America,” Galloway said. “Most people can’t do that.”

I’ve actually been following this principle for 15 years now, without any prior knowledge of Scott Galloway’s advice. By setting aside $150 per month, every single month, in a high yield savings vehicle, I was able to create my emergency fund. I started this habit when I was still paying off credit card debt, reasoning that $150 per month would be relatively painless, and once the credit card debt was completely eradicated, it was even easier to set that money aside. Now I have a nice safety net.

Trust me when I say that this method of building wealth works.

Can You Handle A $1,000 Emergency?

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I stumbled upon sobering news from the Bankrate Emergency Savings Report, which reported that only 44% of Americans would be able to cover a $1,000 emergency if it arose. The remaining group of Americans would do the following (according to the December 2023 Bankrate report):

“35% would borrow money, including 21% who would finance with a credit card and pay it off over time, 10% who would borrow from family or friends and 4% who would take out a personal loan.”

It turns out that over 20% of Americans have no emergency savings set aside, leaving them completely unprepared should they experience a significant financial loss such as termination of employment. Another staggering report from Bankrate is that more than one-third of Americans have more credit card debt than emergency savings. Granted, more than half of the U.S. population according to the poll has more emergency savings than credit card debt, but the mere fact that such a large portion of Americans is saddled with significant credit card debt is sobering.

If you are someone who either has no emergency savings, or an insufficient amount to cover at least 3 months of regular expenses, it would be a good idea to focus on putting even a small amount of money into a high yield savings account in order to build up your emergency fund. It’s a good idea to get into the habit of depositing money into an emergency fund at least once a month, especially if you automate it. This way, you are protecting yourself by fattening up your emergency fund on a regular basis. Make sure to steer clear of traditional bank savings accounts, since the average yield on such accounts is 0.59 percent APY.