Replenish emergency savings lost during the pandemic

A new report says more than half of Americans have less than three months of emergency savings.

TOLEDO, Ohio – For a lot of people right now, money is tight, and that means saving it can be a problem.

A new report from Bankrate.com has found that more than half of Americans have less than three months of emergency savings, which includes nearly half of households earning less than $ 30,000 who have no money. emergency savings, as well as 27% of those earning between $ 30,000 and $ 50,000, and 13% of those households earning more than $ 50,000.

Americans have a total of $ 2 trillion in savings now that they did not have before the pandemic. However, Bankrate.com chief financial analyst Greg McBride says only 1 in 6 households have more emergency savings now than before the pandemic, and these tend to be the ones with higher income.

“Almost half of Americans don’t have more savings now than they did before the pandemic, they have the same amount. And given the widespread economic hardship, just over a third actually have less savings. emergency, ”said McBride.

Millennials are more likely to have saved less: 57% of Millennials (aged 25-40) have no emergency savings or are less than what would cover three-month expenses, compared to 44% of Generation X members (aged 41-56) and 49% of baby boomers (57-75).

So to turn the tide, experts say you need to set a monetary goal, because ideally you’ll want to have enough savings to cover six months of expenses.

“Even then, this will be a somewhat moving target for many years to come, especially from early adulthood to middle age. What constitutes six months of spending is constantly resetting.”

McBride says none of this is unusual, and suggests that in order to start replenishing those emergency savings, you need to pay yourself first.

“The biggest mistake is to wait until the end of the month and try to save what is left, because too often there is nothing left, especially now that costs are rising, and even when there is money left, there’s no consistency to that from month to month, ”McBride said.“ That’s why it’s so important to flip the script, pay you first, withdraw that direct deposit of your paycheck and put it in savings before you even see it. ”

You can also get back on track by setting a tighter budget, cutting out extra expenses, and keeping track of those expenses.

“Successful savings are a matter of habit. So set up a direct deposit of your paycheck to a dedicated savings account, that way the savings automatically occur before you get out of bed on payday morning. you don’t see it, you will win don’t miss it, and that way the savings happen automatically. ”

McBride says that if you’re in business for yourself or work a lot and don’t get a regular salary, you can just set up an automatic transfer from your checking account to your dedicated savings account on a regular schedule. .

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