In a world of uncertainty, one of the most important financial decisions you can make is to set aside extra cash for a rainy day. But a huge percentage of millennials don’t (or can’t) follow this advice.
The Motley Fool explains:
About 46% of millennials don’t have any money set aside in an emergency fund, according to a 2017 survey by GOBankingRates. This can pose a problem when an unexpected event like a home repair, a costly medical bill, or a sudden job loss puts an extra strain on your budget. Without any savings to cover these financial emergencies, you may have no choice but to take on debt or fall behind on your rent or mortgage payment and other bills, which can have a serious impact on your creditworthiness.
Most experts recommend keeping at least three to six months’ worth of expenses in a savings account to help cover unexpected expenses. Look at your monthly bills and calculate how much you would need to cover them. Then multiply that number by three (or six if you want to be extra safe) and create a weekly savings goal to help you reach it.
Living without rainy day reserves is precarious, and it can add anxiety to your life. We recommend saving at least a month’s worth of your salary–even if you have to spend less to get there.