According to an article published on Yahoo! Finance by Business Insider, nearly 50% of the households in America do not have a sufficient amount of money saved for things like emergencies and retirement. The article went on to say that most households couldn't last three months if they lost their income today.
Unfortunately, my husband and I are among those that do not have enough money in our savings accounts. There are a lot of reasons we're in the position we are in -- some that were unavoidable, and some that were self-inflicted -- but we are making changes every day to improve our financial security. This is why we have fallen short of our savings goals, how we are saving now, and what our overall savings outlook is now.
Why we don't have enough savings
We didn't start saving until our late 20s, which really put us behind the curb. Then, in early 2012 we bought our first home, so a huge chunk of our savings was spent on loan costs. Couple those two things with multiple layoffs during the recession, and a few costly illnesses, and it's easy to see why we don't have the amount of money we should.
How we are building our savings now
When we decided to buy our home, my husband put his 401(k) on hold so we could focus on building our liquid savings. We are currently contributing $100 a month to an emergency fund, which will support us if he loses his job since it's our main source of income. We are also contributing $100 a month or more to an interest bearing savings account for our retirement.
Our savings outlook now
As much as I would love to say we have enough money saved to cover our expenses for six months (the recommended amount), we just aren't there yet. We currently have around $2,400 in our emergency account, which would cover our bills for a little over two months. Of course if that money ran out, and we still didn't have a steady income coming in we would have to tap into our liquid retirement savings, and that is something I don't want to have to do.
To reach our goal, we will need to have at least $10,000 in our emergency fund. If we continue to add $100 a month it will take us over six years to reach our goal. I know that is unacceptable, but we have to start somewhere, and I know having something in savings is better than nothing at all.
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- Banking & Budgeting
- savings accounts