And this is how to put money in it.
, 40% of Americans don’t have a spare $400 to cover an emergency cost. That’s pretty demoralizing, considering the term “emergency expense” casts a wide net of situations.Whether the emergency has to do with your car, family, health, or job, or it’s some unexpected home repairs or surprise moves, there are plenty of reasons to set some dough aside for life’s rockier moments. Because if an emergency savings account is anything, it’s clutch.
For those living in disadvantaged communities, sometimes even the thought of saving is too much. “When you’re talking about people of color, people living under the poverty line, it’s very difficult to put money away when you literally just have money to survive,” Anat says.
Take your credit card. It might seem like you should pay that off ASAP, and while you should definitely be making your minimum payments, Liu says you should still save. “You need the emergency fund to prevent getting further into credit card debt, or getting into it again once the card is paid off, because not having savings is what started the problem in the first place.”
Which is why it’s better to flip the script and pay yourself first. That means as soon as money hits your account, aim to put a consistent percentage — ideally a minimum of 10% — into your emergency savings.
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