Preparing for the Unexpected

An emergency fund is a cash reserve that is specifically set aside for unplanned expenses or financial emergencies. And more than 40% of Tarrant County families don’t have one.

Research suggests that individuals without an emergency savings may rely on credit cards or loans, which can lead to additional debt that can be difficult to pay off. They may also pull from other savings, like retirement funds, to cover these costs.

“When clients don’t have an emergency fund, situations that could be a manageable inconvenience become a crisis. Needing a new tire, missing work due to a sick child, storm damage to a home or car—any of these can cause emotional and financial chaos. Taking money out of retirement funds or getting a payday or title loan are costly and never good choices. But, without the emergency fund, sometimes they are the only options for families,” said Director of Employment Solutions Terri Rios.

“Unfortunately, some of our participants have challenges setting up emergency funds. Some have had a bad experience with banks in the past and do not trust the banking system, often because they are unfamiliar with banking regulations,” said Terri. “Many have difficulty putting together enough funds to meet the minimum amount needed to open an account.”

The Employment Solution Program offers financial coaching to all participants of the program. Terri explains, “Our community partner, Pathfinders, facilitates financial coaching workshops to educate our participants on the benefits of banking and the need for emergency funds. The financial coach then works one-on-one with individuals to develop a plan to achieve their financial goals.”

Having an emergency savings helps contribute to financial stability. And setting one up does not need to be intimidating. Start with small steps and celebrate each accomplishment.

Set a Savings Goal

The amount you need in an emergency savings fund depends on your situation. Think of common unexpected expenses you’ve had in the past – car repairs, home repairs, medical bills or job loss. Let the past help you set a savings goal that will cover those costs. Even a small amount can provide some financial security.

Figure Out a Savings Tool that Works for You

You can set up automatic recurring transfers from your account into a dedicated savings account. Or set aside a specific amount of cash each week or pay period. Or, use an app that will save automatically by making regular withdrawals from your account. If you receive your paycheck through direct deposit, check with your employer to see if it’s possible to divide it between two accounts. If you’re tempted to spend your paycheck when you get it, this is an easy way to put money aside without having to think twice.

Gift Your Savings

There may also be certain times during the year when you get an influx of money. For many Americans, a tax refund can be one of the largest checks they receive all year. There may be other times of the year, like a holiday or birthday, that you receive a cash gift. While it’s tempting to spend it, saving all or a portion of that money could help you quickly set up your emergency fund.

Check Your Progress

Find a way to regularly check your savings. Whether it’s an automatic notification of your account balance or writing down a running total of your contributions, finding a way to watch your progress can offer gratification and encouragement to keep going.

“I love the quote by Pierre Omidyar, ‘When you don’t know what to expect, prepare for the unexpected,’” said Pathfinders Financial coach Kristie Johnson. “So what I see is that when clients begin to save, they begin to experience a sense of peace knowing they have the resources available to handle a financial emergency. Whether it is $200 or $2,000, it’s a boost to their confidence and a healthy financial habit that they’re creating.”

Offering holistic services through career coaching, financial coaching and resource connection helps our clients achieve sustainable financial stability for their families. Client Lujwana said, “Learning better money management truly gave me financial freedom. I now have a better credit score, and even though I took a $20,000 cut in pay, I actually have more disposable income because I’m managing my income better!”

If you are ready to make a career change and improve your family’s financial health, please reach out to our Employment Solutions Program at 817.927.4050.