Many Americans are not financially equipped to handle some of life’s curveballs, whether it’s a layoff or pricey medical bill, according to a recent survey.

The survey, from Discover Personal Loans, found that the majority of Americans did not feel financially prepared for events such as a job loss (64%), taking on caregiver costs (63%), an unexpected expense of more than $5,000 (60%), the death of a loved one (59%) or a🌺n unanticipated medical expense (50%).

Having an emergency fund can soften the blow of unexpected expenses, and help you avoid taking on high-interest credit-card debt or tapping retirement funds, the latter which can mean hefty penalties for early withdrawals.

Starting an Emergency Fund

Saving can be challenging: Only about 54% of adults had emergency savings to cover three month's worth of expenses in 2023, according to data from the U.S. Federal Reserve. Taylor Schulte, CFP and Founder of Define Financial. recommends setting aside three to six months of living expenses.

"Some people have a little bit more. Some people have a little bit less," Schulte said. Schulte suggests creating a savings plan based on how much you want to save and the time period over which you want to save.

The fund can build over time: You can put small amounts, such as $100 or $200 a month, aside, allocating that money to a 澳洲幸运5官方开奖结果体彩网:high-yield savings account, 澳洲幸运5官方开奖结果体彩网:money market account, or 澳洲幸运5官方开奖结果体彩网:money market fund, which typically offer higher interest rates t🐭han ꦐtraditional checking accounts.

Some employers help make building up emergency savings easier. In 2024, a federal law allowed employers to create emergency savings accounts for some employees. These accounts are linked to 401(k)s and allow workers to make after-tax contributions. However, these accounts may not work for everyone: There’s a contribution limit of $2,500 and they’re only available to workers considered not highly compensated.