How to Save $500 for an Emergency Fund

Here's a piece from Money Central on how everyone needs to have at least $500 in an emergency fund. It includes some very disturbing information on what percentage of various age groups have less than $500 in the bank including:

• Under 35 -- 34.5%
• 35-44 -- 25.1%
• 45-54 -- 22.1%
• 55-64 -- 19.0%
• 65-74 -- 18.8%
• 75+ -- 14.9%

It's unclear to me whether this data is actually "in the bank" literally or if it means "has $500 saved." If it's the former, it's not as bad as many people may not have $500 in an actual bank but may have thousands in a money market or similar savings account. However, if it's truly "these people have less than $500 saved in total," then these are numbers that make me say "yikes!" Especially the numbers at the bottom -- as people get older. We have just under 20% of the people older than 54 who have less than $500 saved. If this is true, it certainly is disturbing.

Fortunately, the piece goes on to list a few ideas on how you can get $500 including:

• Use your tax refund.
• Try a "buy nothing" month.
• Sell stuff.
• Save your change.
• Review your bills.
• Make it automatic.

Some decent ideas. #1 alone is a $2,200 idea (on average), so it should get many people to $500 -- if only they can find the discipline to save that amount.

In addition to these, you may want to think about some of my ideas listed as part of my quest to raise an additional $10k this year in income -- extra income outside my regular job. Here are some suggestions:

• Turn a Hobby into an Income

• Make Money with Credit Cards

• Sell Stuff You Own

Comments

[Terry]

Actually, the notion of an "average" tax refund is misleading. I prefer to think of tax refunds as having a bimodal distribution, with both a high number of minimal refunds (I'm always within $100 either way) and a high number of Really Impressive refunds. The large refunds tend to go to homeowners (esp recent homebuyers or refinancers with a high mortgage interest component and/or high state local (incl prop) taxes) and some parents who max out the earned income tgax credit. Taxpayers not in either of these groups tend to get small refunds if any. There are also some who are grossly overwithheld and get a large refund, but I don't believe in giving the government an interest-free loan.