6 On Your Side Answers: Setting up an emergency savings plan

KNOXVILLE (WATE) – If an unexpected expense came up like getting a flat tire and needing a replacement, would you be financially prepared? Surprisingly, three in five Americans say they don’t have any emergency savings.

If faced with an expense like an emergency room visit or a car repair, many say they’d either reduce their spending, borrow money from friends and family or use a credit card. Those are bad choices.

Related story: 6 On Your Side Answers: How many months of expenses should I save for an emergency?

The good news is that 82 percent of Americans say they are budgeting, but unfortunately, many don’t budget savings as an expense, which would allow you to build an emergency cushion. The beauty of an emergency savings account is that when an unexpected, but necessary, expense comes your way, you can dig into that account instead of floating the bill on a credit card.

As for how to get that money in the bank, the best way is slowly but surely. Go over your budget and add a line for emergency savings, even if you can only squeeze in $20 each month. Then when an emergency pops up, don’t be afraid to use the money you’ve set aside. You can replenish it when you’re out of the woods.

So how do you go about setting up an emergency plan? Talk with your bank manager or credit union manager. Some provide services for just this type of emergency. The key is not to wait until there is an emergency only to wish you had a plan established.

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