fast facts

Rainy Day Savings Forecast

Are you saving for a rainy day? If not, you can start today with as little as $25.

A recent study by the Consumer Federation of America revealed some dreary news about rainy-day savings trends: Only 59% of U.S. households have savings accounts, and the median value of these accounts is just $4,200. That’s probably enough to cover an unexpected car repair or medical bill, but it likely won’t cover the three to six months’ worth of living expenses that financial professionals recommend keeping in an emergency savings account.

Many banks and credit unions allow you to open a basic savings account with an initial deposit of just $25. That may not sound like much, but every dollar counts when you’re facing a financial emergency—especially if your only alternative is taking a loan or hardship withdrawal from your retirement savings account.

To set your savings goal, add up your mandatory monthly expenses (mortgage or rent, car payments, insurance, utilities, food) and your discretionary monthly expenses (restaurant meals, movies, hobbies). Focus first on saving enough to cover three to six months of mandatory expenses, and then move on to discretionary expenses.

► To find the savings account that’s right for you, visit sites like Mint.com or Bankrate.com.