The F&M Bank Blog

If a major appliance had to be replaced, your car broke down, or you had unexpected medical bills, many people would be in a financial bind. 

 

A recent poll by  U.S. News & World Report found that 40% of Americans couldn’t cover a $1,000 emergency expense with cash or savings, and 60% said they had an unexpected expense within the past year.

 

 

Other surveys indicate that nearly 70% of Americans have less than $1,000 in savings as an emergency fund.

 

When people don’t have an emergency fund, they must find other ways of making ends meet. In many cases that means taking on debt, such as a credit card, which requires interest payments that puts them further behind. In some cases, people have cut back on necessities (such as food and medical prescriptions) just to get by.

 

At F&M Bank, we want to help our customers protect themselves from financial surprises and economic setbacks. That’s why we’re encouraging all of you to start building an emergency fund by saving $1,000 in 90 days.

 

An emergency fund is a pile of cash that you set aside for unexpected expenses. Financial experts recommend that individuals and families set three to six months’ worth of living expenses aside that they could access at any time, which they could do by keeping it in a savings account.

 

If you’re single with no dependents and a steady income, three months of expenses could be enough for an emergency fund. If you’re married with kids, a single parent, or your income is unsteady, then six months would be a better goal in the long term.

 

Let’s focus on saving $1,000 as a starting point. Not only would it help insulate you from financial shocks, if you keep it in an interest-bearing account your emergency fund would grow over time. You work for your money, so why not let your money work for you?

 

Start by saying: Yes you can! Many people might brush such a challenge aside. Many of us have struggled at times. We all have friends and family members who have faced financial hardships, and we know some of our customers do too.

 

The first step to building your savings in Oklahoma City is to take the time to consider how much it would benefit your life to know you had something to fall back on if the need arises or to help out your family if they need help. After all, the hardest part of a journey is making that first step and a commitment to improve your situation.

 

You’ll want your emergency fund to be readily accessible, but it doesn’t have to be immediately accessible. You’re probably better off keeping it out of sight, or even off-site, so you’ll be less tempted to use it.

 

We all know how tempting it can be to use an emergency fund for something that isn’t an emergency, such as concert tickets or a late-night pizza delivery. Once you start tapping into that fund for non-emergencies, it can be hard to stop and it only sets you behind on your goals.

 

Some people start setting something aside on a cash basis, and put it into a bank account at the end of the month, or when they reach a certain threshold such as $20.

 

If you’re going to start building your emergency fund using cash, try to keep it in an out-of-the-way place, where you won’t see it every day.

Being a bank, we naturally suggest you build your emergency fund in an Oklahoma City Savings account where you can earn interest. This makes it less tempting for you to avoid impulsive spending, while also earning interest on what you set aside.

 

It could be tempting to keep these funds in a checking account, but it can be hard to build an emergency fund in the same account where you’re depositing your paychecks and covering your living expenses. It would be like keeping your emergency cash in your wallet, where you’d be tempted to spend it.

 

Another benefit to keeping your emergency fund in a savings account is in case of a natural disaster. If your home were damaged or destroyed, you could lose your piggy bank or the cash under your mattress.

 

If you’ve never drafted a budget before or taken a close look at your income and expenses, this is a good time to start. We recommend that everyone do this at least once a year.

 

There are free budgeting apps available that you can use to keep track of your income and spending. You could also do this on a computer, or with a pen and paper.

 

Keep track and add up everything you spend money on. Over time, you’ll see how even small expenses can add up to significant amounts over time.

 

Every budget should have a goal, such as saving for a major expense or setting $1,000 aside over 90 days. That works out to $11.11 per-day or nearly $78 per-week.

 

This is why analyzing your budget and expenses is so important. A morning cup of coffee and eating out at lunch would easily add up to more than $11. A cup of homebrewed coffee costs less than $.30. 

Think about how much money you could save by bringing a thermos full of homebrewed coffee and your lunch to work.

 

How much are you spending on takeout dinners, food delivery, and restaurants? Think about how much you could save by cutting back on these and cooking your food at home.

 

Take a look at your recurring expenses, such as streaming services. Many of us sign up for a monthly subscription to watch a particular show or a movie, then forget about it for a while. These costs can add up considerably over time.

 

You might cut one or more subscriptions for a while, or limit how many streaming subscriptions you have at the same time. Many people will keep a subscription for only as long as it takes them to binge-watch a particular show, then cancel their membership for a while to save money.

 

Last year, the State of Oklahoma eliminated its 4.5% sales tax on groceries. There are differing opinions on how much this will save the average Oklahoman family. If you’re trying to build an emergency fund, this could help by reducing your grocery bill.

 

Many of our customers have their paychecks directly deposited into more than one account. They might put most of their funds into a checking account, which they use for living expenses, and have a smaller amount put into a savings account, retirement account, education fund, etc.

 

You could consider doing this with every paycheck, or transfer funds from your checking account into a savings account every week or at the end of each month.

 

Many people discover that this makes it easier to reach their savings goals because they only spend what’s in their checking account. If they have a little extra in their checking account at the end of the month, they’ll transfer it into a savings account.

 

Now that you’ve analyzed your budget and expenses, take a look at your income. If asking your boss for a raise is out of the question, or unlikely to work, consider other ways of boosting your income.

If your job provides overtime pay, could you work a few extra hours here and there? Take on another shift now and then?

 

Outside of your job, think about the things you like to do, the skills you have, and how you could use them to boost your income. Walking a neighbor’s dog could be a relatively easy way of earning a little income, especially if you already have a dog yourself.

 

If you have a knack for quilting or sewing, you might do this for your neighbors or create goods that you sell online. Clearing snow, mowing lawns, and yardwork could earn you a little extra cash now and then.

Many people also increase their income by working for rideshare and delivery services. You might also have some items around the house you don’t need but are in good enough condition to sell.

 

Just as even small budget cuts can add up to significant savings over time, increasing your income can also help you save up for an emergency fund.

 

Once you reach your goal of creating a $1,000 emergency fund, there’s no reason to stop there. No matter where you are in life, we could all use a little extra set aside. You might need to save up for a college fund, for retirement, to buy a home, pay for a wedding… the list goes on and on.

 

Consider how far you’ve come, how much you set aside in just a few short months, and what your financial goals will be for the rest of the year.

 

If you have any questions about savings accounts in Oklahoma City, emergency funds, or budgeting, please contact us online or connect with one of our branches in Oklahoma City and the surrounding area.