(3 Minute Read) – Saving for the unexpected isn’t just for emergencies. You can also save for opportunities. As part of America Saves Week, Unitus Community Credit Union is sharing tips to help you prioritize saving so you can reach your financial goals.
Everyone can agree that having emergency savings is ideal, right? Personal finance experts have preached the importance of having three to six months of living expenses put aside for emergencies or a “rainy day.”
Could You Cover an Unexpected Expense?
A January 2022 survey by Bankrate found 56% of Americans are unable to cover an unexpected $1,000 bill with savings. In fact, 35% of those surveyed said they’d have to borrow money in some capacity to cover an unexpected emergency expense like an ER visit or car repairs.
When you’re living paycheck to paycheck and struggling financially, the concept of saving such a large amount seems impossible. Add to that the reasons often given to save are negative — your car breaks down, you lose your income, an appliance needs to be replaced, or there’s a medical emergency — and it’s hard to stay motivated.
Saving for the Unexpected has its Advantages
But here’s something not discussed as often: saving for the unexpected lets you take advantage of opportunities. Let’s say that you have been saving $20 every paycheck for the past year. A friend calls you to share that they just got a promotion and would love to celebrate with dinner at a nearby restaurant. You’re excited for your friend and want to go, and because you have money in your savings, you can pull $50 out to attend. Because you chose to save, you could participate in that unexpected opportunity!
If saving for an emergency has been a struggle for you, would it be easier to reframe saving for emergencies to saving for opportunities? We think so and invite you to create your own “Opportunity Fund.”
“While it’s important to recognize the importance of saving for an emergency or unexpected expense, it’s also beneficial to think about all of the doors that open when you have cash socked away,” explains Lori Williams, Financial Education Specialist at Unitus Community Credit Union.
Whether you’re saving for emergencies, opportunities, or both, the easiest and most effective way to save is automatic. Saving automatically allows you to “set it and forget it.” We’ve all heard the mantra to pay yourself first. You can do this easily by setting up a “split deposit” with your employer, directing a portion of your paycheck into savings. If direct deposit isn’t available through your employer (perhaps you’re an independent contractor or freelancer), you can save automatically by setting up an automatic transfer from your Unitus checking to savings. No matter how you choose to save automatically, the most important thing is building the habit of saving — there is no amount too small to save.
“Saving isn’t a punishment; it is a reward. Financial security and financial freedom go hand in hand.”Lori Williams, Financial Education Specialist at Unitus Community Credit Union.
If you’re ready to start your savings journey but not sure where to begin, check out “7 Steps to Jumpstart Your Savings Journey.” Then take the America Saves Pledge and choose emergency savings as a savings goal. You can also set financial goals in the Unitus mobile app or through digital banking. Let us be your savings accountability partner by providing tips, tools, and resources to help encourage you to stay on track.
Tomorrow, we’re focusing on saving for retirement as our series for America Saves Week continues. Be sure to check back every day this week as we help you develop a plan to save for whatever comes next in your financial journey.