You may not realize it, but this week is very important. It's America Saves Week, which means over a hundred organizations have pulled together to emphasize the importance of saving for your future.
I know what you're thinking: Saving? I can hardly make ends meet as it is. But interestingly enough, during the last quarter of 2008, the personal savings rate in this country was at its highest level in six years.
Why? Because as this recession worsens, people are shying away from spending and instead, stashing away any extra cash they come by. We are finally realizing the importance of an emergency fund, of saving for retirement, and of having cash in hand instead of relying on a credit card with high interest rates.
So this special week, and the events in honor of it, couldn't have come at a better time. Now that people have the drive to save, they need the tools, the knowledge and, let's face it, the means, to make it happen.
-- Identify your target. An emergency fund, in normal circumstances, should equal three months' worth of living expenses for a two-income family, and six months' worth for a single person or a one-income family. In a recession, you need to aim for nine months, either way. It sounds daunting, but remember, this fund consists of living expenses, not your salary, and it should be bare bones living expenses at that. If you lose your job or suffer a medical emergency, you're not going to be going to the movies or having dinner out. You're going to need money to cover your bills, your mortgage, and to put food on the table until things turn around. "Taking action is the key thing. There are people who are in crisis right now because they've lost their income, and most people are fearful of that. For these folks, it's even more important to take a hard look at their expenditures, to pay down high-cost debt, and build emergency savings," says Stephen Brobeck, executive director of the Consumer Federation of America, one of the organizations participating in America Saves Week.