America Saves Week 2019: Saving for the Unexpected
It's America Saves week and today's post will cover one of the most crucial actions to take: saving for the unexpected.
What is the unexpected?
It might sound simple, but just to clarify, you want to save for things that may happen that you're not expecting. For instance, your car breaking down is an unexpected event. However, things you know you will need to do such as an oil change is not the unexpected. (So you should be planning for that type of expense differently.)
Why should I save for the unexpected? What if it never happens?
If you're one of the lucky few who has never had an emergency expense come up, you should play the lottery! (Just kidding!) But seriously, at some point in our lives we are all going to have an expense pop up that we didn't plan. Many people don't have enough in savings to cover a $1,000 or even $400 expense. And that can lead to debt and/or falling behind on other bills if you don't have money in an emergency savings account.
What's the easiest way to save?
I encourage anyone that hasn't done so to set up a separate savings account with automatic deposits directly from your paycheck into savings. It works best if it's out of sight and out of mind; then you won't be tempted to spend that money.
What if I don't have any extra money to save?
This is the toughest part about saving. BUT you simply must do it.
Savings is the best way to provide yourself a safety net to avoid debt in the case of an emergency/unexpected expense.
The first step to take is to determine where your money is going by creating a budget and/or looking at your online banking info (or whatever works best for you). Regardless what method you use, look at where every penny you spend is going.
Then, determine what expenses are flexible, such as dining out, memberships, video streaming services, grabbing coffee to-go, etc. You will need to determine your priorities and then make savings a priority instead of one of those non-necessities. Also, any time you get change from a transaction, put that money into a jar. (There are apps for that, too, that you can look into. Be sure you find one that has good ratings and watch out for hidden fees.)
Make it work!
The moral of the story is in order to maintain or achieve financial stability, saving for the unexpected is a must. The more you can build up emergency savings, the better you're setting yourself up for the future.
If debt is holding you back from achieving financial stability or even building up savings, LSS can help. Call us at 888.577.2227 for your free session or create your online profile and get started at your convenience.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.