Barbara Jones, of Detroit, was a happy woman when she got an unexpected $6,000 bonus from her job last year. “At first I thought it would be fun to use it to take a trip, but until I made up my mind I just put it in savings, “ Jones says. Then, life intervened.
“A week before I decided to book a trip to Italy, my central air conditioning died a horrible death,” she says. “Thank goodness I had this money stashed away, because it took every bit of it to get a new one and have it installed.” While Jones hadn’t designated the savings as an emergency fund, after the AC incident, she created an account especially for the unexpected.
According to the Federal Reserve’s Report on Economic Wellbeing of U.S. Households in 2015, 47 percent of Americans would have a hard time coming up with the cash for a $400 emergency without using credit cards, selling something or borrowing from friends or family. But we can all do better, if we have a plan. Here are 10 steps to do it.
(Editor's Note: This story is part of a partnership between Chasing the Dream and Next Avenue.)