KNOXVILLE (WATE) – It’s a reflection of our times, but only 51 percent of Americans have more in their savings account than credit card debt. This is the lowest level in three years.
Lois from Seymour asks: “Times are tough. How do I go about saving money for an emergency fund?”
If you are between the ages of 30 and 64, typically the prime earning years, nearly one out of three is likely to have more credit card debt than emergency savings.
Economists say high household expenses and stagnant incomes hamper the financial progress of many families.
Twenty-eight percent of Americans, according to a Bankrate.com survey, have accumulated more credit card debt than have set money aside for that rainy day fund.
Seventeen percent have neither emergency savings nor credit card debt.
Bryan Hankla, a registered financial advisor, says everyone should put money aside for a rainy day fund.
“It’s important because every now and then, you’ll have expenses that come up, and you don’t want to insure debt because if you add debt, it has to be repaid. So if you lose a job and have a debt, it makes if more difficult on you,” Hankla explained.
He said three to six months is a good threshold to have enough money to pay a mortgage, car and utilities.
Hankla also explained how the average family can go about putting away money for an emergency fund.
“A good way to start that fund is if you get a tax refund, that’s a good start. If you don’t have a tax refund, set aside an amount that will build that fund up to that three to six month level in 24 to 36 months.”
Hankla suggests starting your rainy day fund small, keep feeding it and watch it build.
You can see Don Dare’s 6 On Your Side Answers every Tuesday and Thursday on 6 News at 4:00.
If you have a question you can send Don an email at email@example.com or call his 6 On Your Side hotline at (865) 633-5974.