CNN Money recently reported that 6 out of 10 Americans don’t have $500 in savings, according to a new report from Bankrate. So what does one do if hit with an unexpected expense like a car repair, medical emergency or even the more costly car and home maintenance expenses? Well, 41% of adults reported having enough in their savings to pay for an expense of $500 or more. About 20% reported that they would use a credit card to cover the expense and another 11% would seek financial assistance from friends or family members. Only about 20% would cut back on their expenditures to try and pay for the unexpected expense. One thing I found interesting about the report is that 47% of Millennials, those age 18-29, said they would be able to dip into saving to cover an unexpected expense.
Rainy Day Expenses
It is important for everyone to keep a financial cushion or emergency fund for those “rainy day” expenses. If you own car and/or a home, have kids or pets, basically just run of the mill items most people need to live, you are going to run into some unexpected costs. Most folks living paycheck to paycheck don’t think they can build a savings account, but there is always room for some types of cutbacks in monthly expenditures. It may not be fun to skip the coffee run or dinner and movie, but it sometimes takes these small sacrifices in life to save for that “rainy day.”
Something we see quite often, are folks who have gotten into a vicious cycle of using credit to cover even day to day needs such as medicine, food and basic needs for their children. Minimum payments on such debts can be never ending. If you find yourself in a financial bind, please come see one of our attorneys for a free consultation to learn how you can get out of debt.