Editorial: Americans need to save more

“People are not making headway in savings, largely in part because they don’t prioritize saving,” said Greg McBride, chief financial analyst at Bankrate.com.

About 22 percent of respondents in the poll said they had some savings but not enough to cover three months’ worth of expenses, as recommended to cover emergencies. The good news is that last year only 20 percent of Americans said they had banked enough to cover three months.

The percentage of people with enough to cover expenses for three to five months also rose slightly, from 17 percent last year to 18 percent.

Still, only 29 percent of polled Americans had enough emergency savings to cover at least six months of expenses, a financial planning norm. That number was down from 31 percent in 2017.

Shockingly, the majority of respondents said they weren’t too worried about their situation. About one in five had no emergency savings at all and said they felt comfortable.

Financial experts warn that people without an emergency fund are one crisis away from disaster.

Emergency savings are not intended to be used to replace a TV or any other situation that doesn’t require immediate action.

True emergencies are defined as a medical problem, need to travel for a death in the family or some other critical need; major unexpected car repairs, failure of a major appliance, large home repairs or deductibles.

Economic professionals acknowledge that building up an emergency fund can be difficult, especially if you are trying to get out of debt. They recommend banking $1,000 for emergencies and then redirecting your efforts toward paying off credit cards and loans.

Once you are debt-free, you can continue to build your emergency fund. Build it up a little at a time — just stay consistent until you reach your goal. Discipline yourself to spend money only on needs, not wants, until your fund is established.

To figure out what six months of expenses would look like, review banking statements or get a personal financial software program.

Account for all bills in your calculations, including entertainment and incidentals that arise during the month.

You can schedule regular payments from your checking account to your emergency find, using an automatic bill pay plan.

Even if you are only able to put your pocket change into a jar to get started, get started. Put away what you can because saving money gives you peace of mind.

Don’t lay awake at night wondering how you are going to cover some cost when money is tight.

As you accumulate savings, your financial worries will decrease. When you are living within your means and have an emergency fund built up, you have the security of knowing that you can get by without work for three to six months, your children’s education will be taken care of and you’ll have enough money to retire.

Your options will expand —you can quit the job that is driving you to the edge of sanity and know that you have time to seek new employment that better suits you. There will be a way to pay for expensive health care that your insurance doesn’t cover.

The more money you have in the bank, the greater the control over your destiny — and the lower your stress.

— The Dalles Chronicle