Emergency funds can pull you out of a bind if you become ill or disabled and can’t work, if you lose a job, if you incur large medical bills or if you have an unexpected bill such as a major car or home repair. The economic success of your family and/or business can be determined by how well you save money and avoid excessive debt.
            

Unfortunately, 43 percent of Americans have less than $1,000 saved. Many financial experts recommend that before whittling away at excess debt, you need to first build an emergency savings fund by getting at least $1,000 stashed away. If you don’t have an emergency fund, there is no time like the present to get started. Consider these tips.

If your income is below $20,000 a year, you should have approximately $500 as your emergency savings goal. If your income is above $40,000, consider having at least $2,000 in your first-stage emergency savings. Try to imagine how much money you would need to replace your refrigerator or transmission, for example. If you had to take an emergency trip out of state, how much money would you need so you didn’t have to rely on credit cards?
 
If you are forced to dip into your savings for an emergency, consider it a loan which must be paid back in a reasonable period of time, and set up a repayment schedule.
 
Pay the minimum on your credit cards until you have reached your first level savings goal. Once you have your emergency savings account established and have reached your goal, it is time to focus on getting rid of excess debt. While you are paying off your debt, continue adding to your savings each month — even if only a minimal amount.
 
Make payments to your emergency account as if it were any other bill. The key is commitment. Too often, many of us become complacent, thinking we probably will never be injured, get sick, lose a job or experience other financial reversals. It is important to be prepared. Be persistent as you contribute to your emergency savings account so you have an effective buffer against financial crisis.
 
When you have no debt other than a mortgage payment, complete your emergency savings account by having three to six months’ worth of living expenses set aside. The general rule of thumb is to eventually have at least $10,000 available for emergencies.
 
When determining how much money you need in an emergency savings account, consider the degree of difficulty you’d have in finding employment if you lost your job. For example, if you are a nurse, you probably wouldn’t be unemployed for long since the demand for nurses is high. However, if you are in a profession with skills that are not high in demand, it will likely take more time to find employment. Experts recommend that you financially prepare to be unemployed for six months if you lose a job. How much money would you need to set aside to survive six months?
 
An emergency savings account will prevent an unexpected expense from putting you in debt. Without an emergency fund, you may be forced to incur credit card debt that could take many years to pay off and end up costing much more in the long run.
 
In general, emergency savings need to be readily available. Money market accounts are usually the best choice. Unfortunately, these accounts and other short-term savings vehicles are not high interest makers, but will allow access to emergency funds more easily than other methods of savings, such as a certificate of deposit.
 
In addition, hide a stash of cash in your home in case of an emergency evacuation or other disaster. Both coins and small bills are good to have in case you are unable to access an ATM. Many Hurricane Katrina survivors wish they had heeded this advice.
 
Consider what you can cut out of your budget to get your emergency savings in place. Could you empty a rental storage shed and save the rental money? Could you have a garage sale? Could you sell your gently used items on EBay? Could you cook more at home and eat out less? Are you paying insurance on a seldom-used vehicle?

Start tucking away money for emergency savings now. The more you save, the more you will be motivated to continue building your savings. The financial peace of having money in savings will far outweigh the temporary joy of buying furniture, toys, cars or going on vacation.
 
For more information about emergency savings, debt reduction, debt elimination and cutting expenses, contact your local USU county Extension office.