Federal statistics show that two out of three Americans have no emergency savings. But the new survey shows that even among people who do have the mechanism for saving, one-third have nothing set aside for car repairs, a tooth ache or a rush flight to an out-of-town funeral.
Beyond that, 28 percent of those surveyed say they could not cover even one month without a pay check at a time when those out of work are taking longer to find new jobs.
The survey was conducted by the Georgia Credit Union Affiliates among its member account holders. It also notes that 56 percent of those with a financial cushion have succeeded in leaving their money alone for at least the last 12 months.
“Having a few thousand dollars set aside for unexpected emergencies should be high on everyone’s financial priorities,” said Daniel Caldwell, president of 1st Choice Credit Union in Atlanta. “Unfortunately, we can tell by overall deposits that a significant number of our members are not currently saving for a rainy day. Difficult financial times have prohibited them from focusing on savings.”
Financial Planners recommend setting aside enough to cover essential expenses for at least three months. Six months is better.
People shouldn’t save for their long-term goals until they have an adequate reserve account, according to Steve Marbert, president of Richard Young Associates in Augusta.
“The emergency fund is your No. 1 priority in your financial situation. Retirement is No. 2. After that are things like college for your kids,” said Marbert, a certified financial planner. “... If you don’t have an emergency fund established, you’re going to fail at everything else.”
Getting there is a matter of cutting back on spending, such as renting a movie instead of going out or taking a brown-bag lunch instead of going to restaurants, according to Robin Jones, a CFP and district manager of First Command Financial Planning in Augusta.
“We have found that when people can visualize and really purpose that account, it’s easier to save,” she said.