Most Americans don't have any emergency savings, let alone an adequate rainy day fund of three to six months of income saved, according to a recent survey by the National Foundation for Credit Counseling and MSN Money. Yet such a fund can be invaluable in helping a family make it through a layoff or other difficult time.
“There is not one person who has been laid off (who) doesn't wish they had more in their savings account,” said Gail Cunningham of the NFCC.
How can a family create an emergency fund, when money is so tight? Some suggestions from the foundation include starting small, by automatically depositing 10 percent of your take-home pay into an interest-bearing savings account each pay day. (Most banks can easily set this up for you.) If you can, increase the amount you're saving over time.
At the same time, take a hard look at how and where you are spending your money and try to find areas in which your family can cut back spending. A family that spends $10 less in 15 different spending categories, the foundation says, will have $150 each month that could go into a savings account. Within a year, they would have built up a cushion of $1,800 an amount that could help them cope with many short term emergencies.