While driving down the road with my kids last week, our thoughts were focused on the fun we were about to have at their friend’s birthday party. Those thoughts quickly turned to finances as the truck’s check engine light flashed, and the engine began to shake violently. Sadly, we did not make it to the birthday party, but the truck did make it to the mechanic’s shop. This gave me a great opportunity to reflect on the importance of maintaining a savings account for situations like this. We never know what unexpected events life is going to throw at us, but there is a good chance that we will experience some kind of unplanned financial hurdle every year.
A recent survey conducted by Bankrate found that 37% of participants pulled money from their emergency savings in the last year. The top reason given for the withdrawal was to pay for emergency expenses including car repairs and medical bills. If an emergency savings account is not available, an unexpected expense can easily lead to a credit card balance. The same Bankrate survey also found that 33% of those surveyed have more credit card debt than they have in emergency savings. The bottom line is that emergencies are going to happen one way or another, but you have the ability to choose whether you prepare for the unexpected or not. If you don’t feel prepared, talk with your advisor so we can help you gain a sense of control in an uncertain world.
Bankrate Survey: