Comments on: 24 Signs That You Could be in Financial Trouble #1: Little or No Savings

By: Jeremy

Jeremy — Fri, 09 Mar 2007 15:48:22 +0000

Bernard, a savings account is fine as long as it is earning competitive interest. I don’t know what it is earning now so I can’t say whether or not it is the best idea for you or not.

The key to an emergency fund is that you need to have it available very quickly in the event of an emergency. You could earn more money with CDs or some other savings vehicles but then you are faced with some withdrawal limitations.

Generally a savings account at your bank provides the most liquidity, but you may sacrifice a little in interest. The next bet could be with an online savings account (ie. ING, Emigrant Direct, etc). They will provide better interest and will provide access to the money in a reasonable amount of time.

So as long as it is earning reasonable interest and you can access the money fairly quickly you should be in good shape.

By: Bernard

Bernard — Fri, 09 Mar 2007 14:13:27 +0000

I have someone who advised me to put aside 6 month worth of my monthly salary as my emergency fund. I had that put aside in a saving accounts. Thinking back, I should look for a better place to place this fund which offer a higher rate than the saving accounts. Perhaps a fixed deposit?

By: Jeremy

Jeremy — Wed, 07 Mar 2007 21:01:45 +0000

You’re right Rebel, when you need it you’re glad it’s there. We had an issue earlier this year as well. Granted, we did not have much of an emergency savings fund, but we had some unexpected car trouble that resulted in repairs of about $1,200.

This was very unexpected but we did have enough set aside to cover it without throwing it onto a credit card or depleting our checking to a point where we wouldn’t have been able to pay more important bills (i.e. mortgage).

We are in the process of building it back up again since then. It can be a slow process but it begins to add up.

By: Rebel

Rebel — Wed, 07 Mar 2007 20:17:41 +0000

This is a great idea. This is how I have started. I have my account taking out $25 a month. I haven’t had anyproblems so I gonna extend that to $50 next month. I am just getting started and it is amazing how we over look how important an emergency fund is. I was laid off last year and have experienced that.

By: Jeremy

Jeremy — Tue, 06 Mar 2007 18:54:03 +0000

For people in such extreme situations it comes down to finding other ways to make up the difference. If increasing income isn’t an option (whether through existing employment or side work) then find other ways to shave a few dollars off your budget each week.

Saving just $5 per week would get you to that $20/month target to start. I can’t get into all of the details as to how to accomplish this because everyone’s situation is different, but skipping that lunch out one day a week, buying some bulk food to extend meals, etc are just some little items that can help.

I know it is difficult because I’ve been there before. Working a limited number of hours in college, racked up a bunch of credit card debt to pay for bills and expenses, etc. In these situations it comes down to finding other ways to save a few pennies here and there or find ways to make a few extra bucks on the side that will allow you to put something, anything into savings.

By: Lulu

Lulu — Tue, 06 Mar 2007 18:18:25 +0000

Just keep in mind that sometimes you do NOT have the money to put even $10 from each paycheck into savings. I am a foreign student who is restricted to working 20 hrs a week maximum on campus for minimum wage. I make between $350-$400 a month depending on whether I get sent home because we are slow. Rent is $300. That leaves $50-$100 to pay for food, the credit cards that put me through school earlier, electricity, and other monthly bills. It is not a choice..but a fact of life for me at this point.
There are some people who just do not have the money to save. What do they do then?