A new study by personal finance content producer Bankrate.com finds that just over half of Americans have more emergency savings than credit card debt. Only 55 percent of Americans have more emergency savings than credit card debt. This is up slightly from last year’s study that found that 54 percent of Americans had more emergency savings than credit card debt. The figure was 52 percent in 2011, according to a press release.
According to another survey that was conducted by Princeton Survey Research Associates International, Americans are feeling barely more financially secure. Among the highest-income households (income of $75,000 per year or more), all five components — net worth, job security, savings, debt and overall financial situation — all declined. Nearly half of all Americans have just $500 in the bank, as we recently reported.
Setting up an emergency fund isn’t that difficult. Here are a few steps to take, according to About.com’s Frugal Living column:
1) Decide how much you’d like to save. How much you would need to have tucked away to feel secure?
2) Calculate your monthly expenses. List all of your regular monthly expenses — housing costs, food, utilities, debt repayments, transportation costs, insurance, and all your “must-pay” bills. “Then, total your monthly expenses, and multiply the resulting figure by the number of month’s that you chose in step 1. For example, if you need to cover $2,500 in monthly expenses for three months, you’ll need to set aside $7,500 in your emergency fund,” explains the website.
3) Put this money aside in a separate account.
Another option is using the “60 Percent Solution” we wrote about. Under this savings theory, you use only 60 percent of your income to live on (cutting out any expenses that go over this amount) and you set aside 40 percent for savings. We think the savings plan is a little easier than chopping away at your monthly expenses this way, but whatever gets the job done for you is the best path to take.