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Whether it is a natural disaster, an unforeseen medical expense or an unexpected home or car repair, you never know when you will face an emergency. A Federal Reserve 2018 report found that 40 percent of U.S. adults are unable to cover an unexpected expense of $400. Additionally, about half of U.S. households are financially fragile or do not have access to $2000 in 30 days during a disaster. The best plan for emergency expenses is to start saving for them today.
Saving money in an emergency fund eliminates the need of using credit cards to rebuild after an emergency. While there is always tremendous support for military members and their families following a disaster, this support is unlikely to cover all essentials. Emergency savings can help you prepare by covering your expenses for food, shelter and water until insurance kicks in. Visit ready.gov/financial-preparedness for more information about how to prepare for a disaster.
Preparing now can lower the financial stress of an emergency tomorrow:
- Save for emergencies. Creating and building an emergency fund is not only a good practice, but puts you in a position to help yourself, loved ones and your community after a disaster. Set aside a certain amount of money each month or each paycheck to add to your emergency reserve.
- Set your savings goal. Save based on your monthly budget and savings plan.
- Use automation. Make savings automatic through direct deposit.
- Separate savings accounts. Maintain your emergency fund separately from your other accounts and only access it during an emergency. (If you qualify for assistance, e.g., Navy-Marine Corps Relief Society, FEMA, replenish your emergency fund).
- Use your tax refund. If you receive a refund on your taxes, put it towards your savings.
- Cash is king! If electricity is out and services are open after a disaster, remember that often cash is the only way to pay for services like food and gas.
- Plan for emergencies. Keep some cash in the same location as your Emergency Financial First Aid Kit (EFFAK) to pay for emergency purchases in the event that ATM’s are not functioning or banks are closed.
- Estimate of your needs. Base the amount of your emergency fund on the needs of your family, including food, gas and other things that you use on a daily basis.
Ask for help designing your personal savings plan with a free personal financial management consultation at your Fleet and Family Support Center (FFSC). Visit navylifepnw.com for FFSC contact information and schedules for webinars, podcasts and classes.
Source: CNIC’s Family and Family Support Program.
