In spite of the well-known importance of an emergency savings account, two-thirds of American households still fail to save even $1,000. What does this mean for families? For most people, falling on hard economic times is not a matter of if but a discussion of when. Life is uncertain, and having a backup plan to keep food on the table for your family is critically important.
While some experts argue that the crisis of savings is mitigated by the fact that many Americans can utilize credit, the reality is that some problems cannot be solved by swiping a credit card. Additionally, the very people who are the most likely to fall on difficult financial times are likely to lack the credit score necessary for emergencies. Having an easily accessible savings account is by far the best option for weathering financial storms. Included here are a few reasons your family needs an emergency savings account.
With nearly 24 million Americans addicted to some kind of substance, many homes have already been touched by the economic downturn that can occur with an addiction. Unfortunately, there are still thousands of Americans who believe addiction is an external problem, or something that happens to other people. Addictions can permeate even the most secure of homes, leaving economic destruction in its wake.
The cost of maintaining an addiction can be enormous, even in the most financially secure of homes. Because humans begin to develop tolerance for substances, they require greater quantities, resulting in a cost that exceeds their means. Within a few months, your family could go from financially secure to bankrupt. By implementing a savings account early on, you will have the means available to send your loved one to rehab before their situation worsens.
As populations begin to live longer, their bodies are exposed to far more chemicals and toxins that increase their risk of cancer and other health problems. The rate of cancer diagnoses has continued to increase as populations age. A disease like cancer can be devastating on your finances and leave your family reeling for years.
For other common medical costs, take a look at the typical uninsured pregnancy. The average American birth costs upwards of $20,000, less if you choose to do a homebirth with midwives or go unmedicated. Having your appendix removed could cost you $33,000 and a simple broken bone can cost as much as $2,500. All of these common life events could be devastating for an unprepared family.
Economic stability in America continues to proceed in constant flux. Many industries see expected downturn while others are unexpected and forced to lay off workers. Losing your primary earner for your home can be devastating for the family. Having a savings account that covers at least six months expenses can help ease the stress of job instability.