Emergency Fund 911: The Disastrous State of Saving in America

Emergency Fund 911: The Disastrous State of Saving in America

Are you financially ready for a rainy day? If you're like many Americans, then the answer is probably no.

According to a recent study by Bankrate.com, 26% of people say they haven't saved a single penny toward an emergency fund. That's because they find emergency savings difficult to prioritize over more immediate financial goals, like covering day-to-day expenses and repaying debt.

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To be fair, this isn't just about not being disciplined with money; there are some external factors to consider, according to the report. There are still some 3.4 million Americans who've been jobless for upwards of 27 weeks, and even employed Americans struggle with day-to-day expenses because salaries remain more or less the same despite the rising cost of essential expenses, like food.

The recession may also have something to do with the low savings numbers. The popular response to the economic crisis has been to pay down debt, rather than boost savings: In 2013, the Federal Reserve Bank of New York published a report that stated consumers have tackled debt faster than they have in over a decade. Unfortunately, there was not a similar boost to savings.

The recommended amount to keep in an emergency fund is at least six months' worth of take-home pay, but currently only 23% of Americans have met that guideline, according to Bankrate.com. Those who reported a higher income were more likely to have met that baseline—but even among those earning at least $75,000 a year, only 46% have six months' worth of expenses stashed away.

Unsure how to balance your financial priorities? Here's more on the three important numbers you need to know and grow. (And here's a hint: one of them is your emergency fund.)

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