If your emergency savings is on a permanent fast, maybe it’s time to plump it up.

4 minute read

Did you know that nearly three times as many Americans report having less in emergency savings than they did before the COVID-19 pandemic? That’s according to a new survey from personal finance site Bankrate.

The same survey found that only 16% of respondents are “very comfortable” with the amount they have in emergency savings while 46% – predominantly low-income workers – said they are “somewhat uncomfortable” with their emergency savings amount.

Whether you’ve drained your emergency savings due to the pandemic, never had much emergency savings to begin with or you’re trying to figure out how much you should save, fattening up your emergency savings can reduce financial stress down the road when unexpected expenses strike.

Below are eight signs it’s time to focus on raising your emergency savings balance.

1. You have no emergency savings fund

There’s nothing skinnier than a non-existent emergency savings fund. And it’s easy to throw up your hands and say “why bother?” when you’re starting from nothing. However, you have to start somewhere, and time will pass whether you begin building emergency savings or not.

So, get started by going to the bank with even a small amount such as $100 to open an emergency savings account. Then make room for regular deposits in your monthly budget. You’ll be up to a respectable balance before you know it.

Find out: 5 Fun Apps to Build Emergency Savings During COVID-19

2. You’re constantly draining emergency savings

Are you constantly tapping your emergency savings, causing it to dwindle to a scary low amount? Or maybe you only make withdrawals occasionally, but the small amount you keep for emergencies gets gobbled up fast by even the cost for a small car repair.

If this is the case, work hard and make a few sacrifices to increase the amount you have in emergency savings so that one or two emergencies won’t wipe out emergency funds.

Find out: How to Pay for an Emergency Without an Emergency Fund

3. Your job security is threatened

If you’re in the restaurant, hotel, travel or another industry that’s been hit hardest by COVID-19 lockdowns, mandates and public distrust of safety protocols, you already know you could probably lose your job if the economy worsens or your employer can’t recover from recent losses.

Don’t wait until you lose your job to start thinking about how you’ll pay the bills with no income or reduced income. Start socking away as much from each paycheck as possible not to avoid a dire financial emergency later.

Find out: Americans are Looking for Pandemic-Proof Employment

4. You’d be in trouble after a month or two with no income

What if you lose your job or become seriously ill and must take unpaid time off? If you think a month or two of emergency savings will get you by, you may want to reconsider. Even if you have enough to pay for rent, utilities and other bills for two months, you know how life goes.

It’s kind of a given that if you lose your job, you can typically count on other crises riding the back of your bad luck. For instance, what if your car breaks down? What if your dog gets sick and you have a $400 vet bill? What if your favorite aunt dies and you have to travel to the funeral?

Better to have too much than too little saved to get by when emergencies come your way, so find a way to add at least $100 – more, if you can afford it – each month to your emergency savings.

Find out: How to Recession-Proof Your Finances 

5. Your savings covers only the smallest emergencies

Sure, you can cover the cost of a new battery or putting new brakes on your car, but paying for a bigger emergency expense – spending thousands for a new home air conditioner, for example – isn’t within reach. If that’s the case, it’s time to work on fattening your emergency savings to an amount that could cover at least a couple of big emergency expenses at once.

6. You’re using credit cards to pay for emergencies

If you’re charging car repairs, medical bills and unexpected travel plans on a credit card, that defeats one of the main purposes of having an emergency fund. Work on building your emergency fund so if things get tight, you don’t have to rack up more debt on a credit card.

Find out: 5 Things that can Happen When You Don’t Pay Your Medical Bills on Time- or at All

7. You have crappy health insurance

Sadly, many people can’t afford good health insurance, so you’re not alone with your short-term policy that pays absolutely nothing until after you meet your $12,000 deductible. That’s little consolation, though, if you get slammed with a big medical bill.

When you don’t have good health insurance, do your best to build your emergency savings so you can cover an expensive medical procedure or prescription that your insurance won’t pay.

8. You’re a one-income household

Whether you’re single or have a family, if you’re the sole breadwinner, you won’t be able to rely on a second income to pitch in if you lose your job or have a costly emergency expense. But you can always rely on a good-sized emergency savings account to get you through.

So, get started now working up the amount in emergency savings that experts recommend: Enough to pay all the bills for at least three to six months without an income.

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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