The Scary Truth About Savings 😱

Welcome Back, Fellow Parent

With Halloween in our rear view mirrors, I wanted to share something with you truly terrifying:

According to Bankrate, over 1 in 4 U.S. adults have zero emergency savings. 😱 

That’s right, 27% of people are just one surprise expense away from a serious financial struggle.

And guess what?

This is the highest percentage since Bankrate began asking about savings in 2020.

Breaking Down The Numbers

When it comes to emergency savings, the picture changes significantly depending on your generation, and unfortunately, it’s not great news for most:

• Millennials (28-43): The highest percentage of any generation, with 34% having no emergency savings. Ugh, 🤦‍♂️ insert some super outdated comment about too much avocado toast.

• Gen Z (18-27): Close behind, with 29% lacking savings. Big yikes! (Did I use that right? 😅)

• Gen X (44-59): 31% of Gen Xers report having no emergency fund.

• Baby Boomers (60-78): The most prepared, with only 16% lacking an emergency fund.

This means that millennials—many raising young kids—are the least likely to have a financial cushion.

It’s a stressful situation, especially when you think about unexpected expenses like a car repair or medical bill. And let’s be real—if you’ve got kids, you know life is full of surprises.

From an unexpected visit to the ER (thanks croup/flu/COVID season) to a last-minute birthday gift for that party you forgot about, it feels like there's always something popping up.

These surprises aren’t always fun, and without a financial cushion, they can quickly turn into a serious burden.

Why You Need an Emergency Fund

Having at least three months of expenses saved can be the difference between staying afloat and going under when life throws a curveball.

Financial experts recommend having anywhere from three to six months of expenses saved, and in some cases, even more.

We learned a valuable lesson in 2020 during the pandemic: depending on your career, you might need more than the minimum.

Imagine losing a job, having a major home repair, or dealing with medical costs. Without savings, it’s easy to get stuck in a debt cycle that just keeps growing—kind of like that laundry pile in the corner of your bedroom.

If you aren’t already, start keeping track of each of your expenses for a few months. Multiply the average of these months to determine your emergency fund goal.

Personal preference, but I typically recommend keeping 6-9 months of living expenses in cash-based assets (either a high-yield savings account or CD ladder). I’ve become a bit more risk averse when it comes to this since my daughter was born. It may just be me, but I like to keep a little extra saved just in case.

5 Simple Tips to Start Saving Today

I get it—saving money can feel overwhelming, especially when the budget is already tight. But the good news is, that even small steps can make a big impact over time.

Here’s how to get started:

• Automate Your Savings: Set up an automatic transfer from your checking to your savings account, even if it’s just $10 a week. You won’t miss it, but it adds up. The key here is consistency—automating takes the decision-making out of your hands, which makes it easier to stick with it. Plus, watching your savings grow over time can be a huge motivator.

• Cut One Small Expense: Pick one non-essential expense to cut back on—like skipping that drive-thru coffee twice a week. It might not seem like much, but if you’re spending $5 a pop, that’s $40 saved in a month. Use that money to build your emergency fund. Look for other small expenses too—maybe it’s streaming services you barely watch or that gym membership you haven’t used since last January. Little cuts like these can have a big impact on your savings.

• Make It a Family Effort: Get the kids involved! Start a family savings jar where everyone can pitch in their loose change. It’s a great way to teach kids about saving while building a small buffer for emergencies. You can even turn it into a game—set a family goal and celebrate together once you reach it. Teaching kids the value of saving early on can help set them up for financial success in the future, and it makes the whole family feel like they’re working towards a common goal.

• Take Advantage of Windfalls: Got a tax refund, bonus, or even a birthday gift? Instead of spending it all, put a portion directly into your emergency savings. Windfalls are an easy way to boost your savings quickly without impacting your everyday budget. Even if you only save half, it's a major step toward your financial security.

• Find Creative Ways to Save: Make saving money fun by finding creative ways to cut costs. Host a no-spend weekend challenge with your family where you only use what's already at home. Sell items you no longer need on marketplaces like Facebook or eBay. Redirect these extra funds into your emergency savings to see a bigger jump more quickly.

While these statistics are pretty spooky, you have the power to change your financial future by starting small and staying consistent.

Outro

I want to hear from you…

Thanks for reading, and please don’t hesitate to reach out with any questions.

I love writing content knowing it’s helping at least one family out there.

See you next week,

The Dollar Dad

Did a friend send you today’s newsletter?