No emergency savings? Why you should start putting money away now

No emergency savings? Why you should start putting money away now
emergency savings

emergency savings

Money, money, money — where have you gone?

When it comes to rainy days many of us don’t have two pennies to rub together. About one in four Americans has no emergency savings, according to a report released in June by, which publishes, aggregates and distributes personal finance content online. The thing is, survey after survey shows we really want to save.

“After years of casting off emergency savings as unnecessary or inconvenient, Americans now realize, since the recession, how important emergency savings truly is,” says Greg McBride, senior vice president and chief financial analyst at “When we ask people what are your financial priorities, savings bubbles up to the top.” And yet: “The amount of savings that people put away has not improved,” McBride says.

Of those polled by, 67 percent have socked away less than the recommended six months’ worth of expenses, including many with household incomes exceeding $75,000. Only 40 percent have saved at least three months’ expenses in savings, down from 45 percent last year.

Despite that, financial experts say simple steps can help consumers turn a corner, whether it’s building up enough green for that dream house with the big yard or saving enough cheese to eat following a job loss.

Bank savings before money goes out the door

To start, begin with savings. “On payday, have the amount you want transferred to your savings account, at a different bank,” recommends Chris Long, a certified financial planner and owner for highly rated Long Financial Planning in Chicago.

Often saving comes as an afterthought, or it looks appealing to do it once you spend money on your wants and needs first, Long says. Resist that urge. “That’s just a recipe for being unsuccessful. It’s like when you’re at a restaurant people tend to eat whatever is given to them – no matter the portion size,” he says. “People tend to spend whatever money they have.” Automatically depositing money in another bank puts up one more barrier to avoid quick, thoughtless transfers to checking, he says, such as for an impulse purchase.

MORE: 6 personal finance tips to bank more savings

Shop, instead, for high yield savings accounts online. “Yes, interest rates are low, but the difference can literally be a 10- to 20-fold increase,” says McBride, from .05 to 1 percent interest. What some online banks or credit unions might lack in branches, they may make up for in higher interest rates, experts say, and offer a place where money remains protected from the swings of the stock market and other riskier investments. Check reviews for banks or credit unions on Angie’s List.

Meet goals one dollar at a time

Begin with small goals, if not regularly saving already, and set goals based on what you want and need from savings. Maybe it’s that dream house you want to buy or the peace of mind if you have to temporarily go from two incomes to one. Use online tools such as a saving calculator to get there. Regularly review bills, financial experts say, from cable to homeowner’s insurance, to see where you can reduce expenses going out, and consider taking on additional work — if you have the capacity and need to make extra — to save some back.

Sharon Seibel and husband Kevin, clients of Chris Long, automatically contributed to savings directly from their paychecks. Sharon says that’s made all the difference since they went from two incomes to one, following a company buyout a couple years ago and the end to subsequent contract work she’d taken on.

“I’m just grateful we have the cushion there,” Sharon says. They’re presently dipping into savings to cover real estate taxes and homeowner’s insurance, as she figures out her next move. “It’s been a Godsend, I’m so grateful for it.”

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savings tips
Behind on stacking some serious coin? Start saving with these tips. (Photo by Brandon Smith)

Whether you have a $0 balance or three-month’s worth of expenses already in the bank, finance experts say these tips can help build up your savings.

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