Financially fragile means you don’t have access to at least $2,000 in a savings account (the amount that is needed to cover most emergencies) to cover an unexpected situation.
What I found most interesting about the statistics is you’d think it would just be a low-income problem. It’s not. A surprising number of middle-class families – including 25 percent of those earning between $75,000 and $100,000 — are also “fragile.” What’s even more concerning is it’s a bigger problem in the USA than in many other countries.
How To Boost Your Savings
If you want to save money – and keep it out of reach, you must move it out of your spending account and into a place where there is a perceived barrier to getting at it. That’s why 401K’s work so well because you can’t get at the money once it’s moved out of your paycheck.
Internet banking is a good choice to replicate this effect. (Capital One 360 is a good option. They don’t have account minimum fees, AND they pay higher than average interest rates.)
To get your money out, you have to transfer the money back to your checking account – which takes a couple of days. There in lies the barrier. You’re going to have to think about moving that money before you make the move, and wait a few days for the cash.
Additionally, you should keep a separate account for emergencies so that you can keep tabs of how much you’re saving in your emergency fund. Lumping it all together with other money for savings will give you a false sense of how much money you have available for emergencies.
Saving $2000 may seem like a daunting task, but there are several ways to make it happen quickly.
1. Use the $5 method
Every time you get a $5 bill don’t spend it. Put it in the bank. You will be amazed how quickly you save up $2000, and you won’t even miss the money.
Read: The Joy of Saving
2. Sell Stuff
A couple of months ago I found these on-line yard sales posted on Facebook. First I thought what a great idea, but then I loved it even more when I was able to offload a few items and make some quick cash. All the money I made went directly into my saving account emergency fund.
3. Earnings from Rebate Sites
Any money I make from online rebate sites like Ebates I put directly into my savings account emergency fund. It’s like play money in a way, and you won’t even miss it since you didn’t have immediate access to it anyways. Learn about all the rebate sites out there here.
These simple strategies are great ways to boost your savings account emergency fund and end the cycle of financial fragility.
Having a well-funded emergency fund gives you a degree of comfort and assurance that you can handle any emergency that comes up.
That’s stress-free living!