How to prepare for rainy days

Did you know that over 50% of people in the U.S. don’t have enough savings set aside to cover even 3 months of expenses? I don’t know where you are at with your emergency fund, but I trust you can agree that setting aside some cash for those unexpected needs is a must.

The Pain of Saving

Why is it that less than half of us have an emergency fund? Would we rather be left standing out in the rain without an umbrella? Of course not! Rather, the immediate pain of setting aside more money from our paycheck feels more painful than the potential hardship that may or may not occur down the road.

However, consider the following stats from a FINRA study:

  • 26% of people have unpaid medical bills
  • 22% have overdrawn on their checking account
  • 13% made a late payment on their mortgage more than once
  • 3.5% had to file for bankruptcy

Pack Your Umbrella Now

Unlike the daily weather forecast, we don’t have the privilege of knowing when life is going to throw us a financial curve-ball. Hope is not a strategy. At some point the clouds will gather and the rain will fall. There is no better time than the present to begin saving.

Maintaining some rainy day savings will help you to avoid the statistics listed above. A healthy emergency fund should be large enough to cover your expenses for a 3 – 6 month period. If you haven’t already, consult with a financial planning professional and implement a savings strategy.

 

Source: FINRA Investor Education Foundation National Financial Capability Study, 2012