Between monthly expenses and paying down debt, saving for a rainy day often takes a backseat for many Tennessee residents. However, having an emergency savings fund can be vitally important. If something were to happen that required immediate cash, people without emergency savings may resort to using their credit cards and incurring debt unnecessarily.
A lack of emergency savings is apparently a widespread problem in this country. According to NBC News, 66 million Americans have absolutely no emergency savings whatsoever. In fact, a recent study found that in the event an unexpected but necessary $400 expense arose, 47 percent of people would have to borrow money or sell a personal item in order to be able to afford it.
However, it’s never too late to get started with a savings fund. It will most likely take a long time to build up a substantial safety net, so putting a small amount aside from each paycheck can be a good place to start.
The general rule of thumb according to Forbes is to have six months’ worth of income set aside in case of an emergency. However, the ideal amount of money to have in savings will vary depending on a person’s life situation. For instance, a married couple who owns a house and has children will likely need to have more set aside than a young single person who rents an apartment. In addition, people who are self-employed and do not have the benefit of a regular paycheck may want have more than six month’s income set aside since how much they take in from month to month likely varies.