Set a Goal: Save for Emergencies
By Lila Quintiliani, AFC®
Military Saves Assistant Coordinator
Communication & Outreach
The strange thing about emergencies is that even though you may not know the specifics in advance, you can bet with a high degree of certainty that at some point something unexpected will happen. And this something will require an outlay of money. The microwave will die. The brakes will need replacing. The kids will need dental work. And these things usually happen sooner rather than later. That is why, on this first day of Military Saves Week, we are asking that those who take the Military Saves Pledge consider pledging to save for emergencies.
Your financial action for today: open a separate savings account, if you don’t already have one, as an emergency fund. If you have an emergency fund and do not have at least $500-1000 in it, pledge to save more each month until you reach that goal.
An emergency fund is the cornerstone of a good financial plan. Even a fund of a few hundred dollars may mean the difference between years of credit card debt and financial solvency. I have counseled servicemembers who went into a deep spiral of debt because a tire needed to be replaced or an airline ticket needed to be purchased for a family emergency.
Action Plan: Start an Emergency Fund
There are those who say they can’t “afford” to save, but the truth is, they can’t afford not to save. There are ways to save, even on a tight budget. Stashing a dollar each day (less than the cost of a bottle of soda at most gas stations) will yield a fund of $365 dollars at the end of the year, a decent start to any emergency fund. A tax refund can also be used to fund an emergency fund. By using form 8888, filers can designate part of their refund to go to a savings account.
An emergency fund is step one on a journey to financial success. Once that is established, it gives one the freedom to repay high-interest debts and then set other goals: a new car, a house, retirement, a college fund. The security of an emergency fund truly allows one to Start Small, Think Big. Take the Military Saves pledge today and take this first step to becoming a saver!