According to the Federal Reserve, about 44% of Americans cannot handle a $400 emergency expense. Another study shows that 34% of US homes faced at least one emergency in 2018, with the average cost of managing these emergencies being $2,500.
These statistics signal the need to start stashing away money for emergencies. You never know when the next emergency will arise, and you must have enough to cover such unplanned expenses.
If you’re like many Americans, you probably burned through your emergency savings at the onset of the COVID-19 pandemic. However, you can quickly build back with the right moves.
The first step is to create a plan for growing your emergency fund. It’s recommended to continue saving until you have at least three months’ worth of salaries in your emergency fund. Using a budget planner to track your spending will help you achieve your emergency saving goals.
The second and most crucial step is choosing where to save your emergency funds. Generally, it’s advisable to keep your emergency funds separate from the account you use for paying bills.
More importantly, avoid keeping emergency monies under your mattress like Americans love doing. Not only will your savings see little to zero growth, but the funds will also lose value — especially with ever-rising inflation.
A good option for saving towards emergencies is to open a money market account. Unlike regular savings accounts, money market accounts offer higher interest rates, helping your emergency fund grow in value.
The only problem with money market accounts often require high opening amounts and may require you to maintain a specific balance to qualify for the top interest rate.
However, a few money market accounts require low opening amounts and have easy-to-fulfill criteria to earn top interest rates. A great example we found is the CIT Bank Money Market account.
CIT Bank — not to be confused with Citibank — is a top-50 online bank notable for its high-interest rates and simple account requirements. The CIT Money Market account offers an annual interest of 0.50% on your saved funds. This is over seven times higher than the national average interest rate, which currently hovers around 0.05%.
You only need to deposit $100 to open the CIT Money Market account. You don’t have to maintain a specific amount to qualify for the 0.50% interest rate after that. Other benefits of the CIT Money Market Account include:
- No account opening and maintenance fees
- Easy access to saved funds
- Schedule deposits to automate savings
The CIT Money Market account is right for anyone who wants an emergency savings fund that will keep growing in value. To illustrate: you can have $7000 with interest by depositing $600 monthly in your Money Market account. You can see the calculations in the chart below.
At Wealth Nation, we’re always concerned about financial well-being. And this is why we advise signing up for the CIT Money Market account by clicking on the link below. Start saving for emergencies now; unplanned expenses can arise anytime, and you’re better off prepared than not.