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Consumer Watch: Emergency fund can decrease stress

Who needs an emergency fund?

Everyone does, whether you’re single or married.

In the Defense Department’s most recent survey of active-duty spouses, 69 percent said their families have $500 or more in emergency savings.

An emergency fund is one of the biggest stress relievers you can give yourself. And who doesn’t want to reduce stress?

When you have an emergency fund, there is less anxiety if the washing machine breaks or if the car needs an expensive repair. Instead of trying to borrow the money or putting the repair on a credit card, you can pay for it out of the emergency fund.

Then, over the next few months, you replenish that fund.

Everyone should strive for an emergency fund of at least $1,000. And to really sleep better at night, try to put away enough for three to six months of living expenses. In this economy, with its turbulent job market for spouses, some experts are advising nine months’ worth.

For the 29 percent of you in the 2008 survey who said you didn’t have at least $500 set aside for emergencies, you can do it — a dime at a time if you have to.

And for the 2 percent who said they didn’t even know whether they had an emergency fund, get a handle on those finances immediately! Talk with your spouse now about where things stand. Here are a few tips to get you started or to increase the size of your emergency fund.

• Have your bank or credit union automatically transfer money each payday into a savings or money market account. Keep this separate from your other accounts so you’re not tempted to dip into it for nonemergencies. Saving $50 a month amasses $500 in just 10 months.

• Pack a lunch at least three days a week. Peanut butter and jelly sandwiches are cheap, but there are plenty of other ideas. Make a pot of soup on the weekend, or take some leftovers from last night’s dinner. If you save $5 a day three times a week, put the $15 in your emergency fund. That’s $60 a month.

• Save your change and put it in a jar each night. At the end of the month, put it in your emergency fund at the bank. Some banks and credit unions have nifty coin machines that let you key in your account number and pour your coins into the machine and right into your account for free, without having to roll them up.

• Plan cash withdrawals so that you don’t have to pay ATM fees. Look at your most recent statement to see how much you’re spending on these fees. If you’ve been spending $20 a month, put that into your emergency fund rather than throwing it away.

• Use coupons. It’s not hard to save at least $10 on groceries in a shopping trip if you use coupons wisely. Compare prices to make sure a similar item that would be cheaper even without a coupon isn’t available. Look at the receipt and your savings, and put the savings in your emergency fund.

• Think before you buy. Do you need it or do you want it? If it’s a “want” and you can say no, put that money into your emergency fund instead.

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Questions or comments? Contact staff writer Karen Jowers at kjowers@militarytimes.com.