December 30, 2020 Issue, Page 5 of 10

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December 30, 2020 Preparing for a Financial Emergency 5 tips for building (or rebuilding) your emergency savings Photos courtesy of Getty Images FAMILY FEATURES Look for Ways to Cut Back save all or a portion ofthe return, If you’re able, consider having he new year provides an opportunity to re-evaluate different While you may have already made changes to your spending habits amid your refund directly deposited in your emergency account. The aspects of your life, and that includes your budget and savings the pandemic, periodically shopping for competitive rates of recurring Same strategies can be applied to any government aid checks you habits, Planning for emergencies by building— or rebuilding bills, such as cable and internet, cell phones insurance policies and other may receive, such as a second round ofstimulus money that could be distributed to eligible citizens in 2021 to help reinvigorate the if the COVID-19 pandemic required making a withdrawal — a utilities, can be a simple way to save some money each month. Start by economy amid the COVID-19 pandemic. savings account to withstand the unforeseen can increase confidence in asking your current providers about any special rates and promotions that There may also be other times throughout the year when you receive your overall financial health and reduce worry that a significant life event may be available to loyal customers then check with alternative providers one or more cash gifts, like your birthday or holidays, that can help will negatively impact your finances. to see if they can provide the same or better offerings at a reduced cost. provide a nice cushion to your emergency fund if you can avoid the “Our research shows having emergency savings is the foundation for Sometimes returning to your current provider with a more competitive temptation to spend it. long-term financial health,” said Chandni Ohri, program lead in savings rate from elsewhere can be extra incentive to work out a deal to keep a and financial health with BlackRock’s Emergency Savings Initiative. longtime customer. Replenish What You Use Also look at any subscription services you use, or potentially don’t “The start of a new year is a good time to make a savings plan, which but still pay for, and see if they offer a cheaper plan that still meets Remember to review and adjust your savings plan as needed, whether can consist of putting a little bit of money away regularly.” your needs or if you’re able to cancel subscriptions you no longer use you're able to contribute over a ionger period of time without dipping into Even before the pandemic began, 4 out of 10 Americans had a hard frequently. Other expenses such as dining out or buying new clothing, the account or if an expensive life event pops up that requires using all or a time finding even $400 to cover an emergency, according to a report from and accessories could also be scaled back if you find you're splurging too portion of the funds. the United States Federal Reserve. However, if you don’t think you have Should you need to dip into the savings, do your best to make much. Avoid completely cutting spending for leisure activities from your replenishing the account to a level you're comfortable with a primary money to save, consider the majority of people who were able to save for budget but look for reasonable tweaks that can allow you to set more goal in case any additional unexpected expenses arise. Alternatively, if ‘an emergency for the first time in 2020 earned less than $60,000, according money aside for unforeseen expenses, your saving is going well, consider increasing the amount you're saving to research from BlackRock’s Emergency Savings Initiative, a group of each paycheck so you're better protected against any major life changes nonprofit experts, corporate partners, and providers. Changes in spending Take Advantage of One-Time Opportunities to Save or able to finance a large-scale purchase down the road. due to the pandemic plus government stimulus packages helped many Assuming you expect to receive a tax refund, this provides an easy Find more information and tips for building your savings individuals create much-needed cash buffers. Consider these tips to build your emergency savings account and way to boost your emergency fund ifcircumstances allow you to at savingsproject.org. create a buffer of cash for when emergency strikes. Start a Savings Habit While it’s less important to have a specific dollar amount in mind, getting into the habit ofputting some money in savings with each paycheck can help protect you should an emergency arise, While one good rule of thumb is to set aside enough to cover roughly six weeks of living expenses — housing, food, transportation — take a look at what it would cost to cover unexpected issues with your car, a trip to the hospital, a leak in your home or the replacement ofa major appliance and start there, Even a small amount, such as $50 in your savings account when it’s the day before payday and you're running on fumes, can save you from an overdraft fee, having to resort to using a credit card, borrowing from a loved one or taking out a loan. However, research from the AARP Public Policy Institute found having a cash buffer of approximately $2,500 can help prevent financial hardship over the longer term. If you lose your job, for example, your emergency account could help pay for necessities while you find a new position, or the funds could supplement any unemployment benefits you may receive. Automate Your Savings Because an emergency can strike at any time, it’s important to have easy access to your funds. However, the account should also be sep- arate from your checking account so you're not tempted to dip into your reserves. Pick a free savings account with no minimum balance requirements and link it to your everyday account to quickly move money over if you need it, Look for ways you can automatically save such as enabling roundups from your checking account to be transferred to your savings with each purchase or having your employer split your paycheck and automatically deposit a portion into savings each payday. If you’re planning to stash funds away for months or years that can serve as both an emergency fiznd and long-term savings, consider a high-yield savings account,