Emergency Savings Account

Is your credit card completely paid off? According to the Federal Reserve and other studies conducted in 2015, the average American household now owes $7,281 in credit card debt. That represents credit cards alone – and doesn’t include student loan debt, car debt, or mortgage debt. Credit card balances are continually on the rise, so what are you doing about it? Here are some important things that you should keep in mind in regards to credit card debt and your emergency savings account:

1. Don’t charge credit too much. A survey conducted by the consumer finance information website Bankrate.com in February 2014 revealed that almost half of people in the U.S. have more credit card debt than money in savings. Almost half! That means that none of those people have enough money in their emergency accounts to pay off their total credit card debt.

2. Get in the habit of saving money. A majority of Americans are saving less money overall, and that is frightening. Without an emergency savings account to fall back on, bank accounts can be quickly and easily drained in emergency situations and circumstances.

3. Avoid loan delinquency. Sometimes, we don’t have control of our circumstances, and emergencies happen. Medical bills, a car accident, expensive medication, car trouble, and unexpected expenses can come out of nowhere, leaving you feeling lost and ill-prepared. Without an emergency savings account, your money is drained. Suddenly, you can’t make your loan payments and you find yourself filing for bankruptcy. Bankruptcy is a fresh start – but building an emergency savings account is extremely beneficial.

4. Don’t be “liquid asset poor.” If you are unaware of this phrase, it means you have less than three month’s worth of pay in your savings account. Although the economy has not been the greatest, you can continue to build your savings little by little. Have your employer immediately withdraw the amount you wish to contribute to your savings account – so you’re not tempted to spend it!

At Richard Banks & Associates, we want you and your family to be prepared with a backup plan in case tragedy strikes! Like the old saying, it’s always better to be safe than sorry. Learn how to save money and experience more financial freedom. If you’re overwhelmed with your current debt, call us at 423-244-0009. Have a wonderful week!