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Emergency Savings

The Why, How and Where to Prepare for the Inevitable

Why: Saving for emergencies is, and should be, a top priority for every American. Maintaining an emergency savings account may be the most important difference between those who manage to stay afloat and those who sink in debt. That's because keeping $500 to $1,000 of savings for emergencies can allow you to easily meet unexpected financial challenges such as:

  • repairing the brakes on your car;
  • buying your child a new pair of needed shoes;
  • replacing a broken window in your house;
  • paying for a visit to the doctor when your child has the flu;
  • covering the dental expense of filling a painful cavity;
  • paying for a parking ticket; or
  • flying to visit a sick parent.



The emergency fund not only provides you with the money to pay for these expenses, it also gives you the "peace of mind" knowing that you can afford these types of financial emergencies. Not having an emergency savings fund is an important reason that many individuals borrow too much money at high interest rates. For example, by saving for emergencies, Americans would probably not have to take out about $2 billion a year in payday loans at interest rates that average 300 to 500 percent.1

How: There are many places to find money to save. Start with the loose change that many people accumulate. Americans typically save more than $100 in loose change each year. Use this change to open and grow a savings account. Other simple ways to save money include packing a lunch instead of eating out and making coffee at home rather than stopping for that expensive designer coffee. If you receive a tax refund or Earned Income Tax Credit, use a portion of this money to begin or increase savings. Since the Tax Credits average nearly $2,000, you may be able to open a savings account and still have plenty of money to pay off debts or cover other expenses.

Saving money for an emergency fund may be easier if you involve your whole family in meeting this challenge. After you've explained the importance of emergency savings to your spouse or children, they may even help build the account. And, they will be more likely to understand why it's more important for you to increase these savings than to pay for expensive gifts at birthdays or Christmas. Another way to accumulate the $500 to $1,000 of emergency savings is to set up a monthly automatic transfer of funds from checking to savings. Automatic savings is the easiest savings. What you don't ever see, you may never miss.

Where: It's usually best to keep emergency savings in a savings account which offers easier access to your money than certificates of deposit, U.S. Savings Bonds, or mutual funds. Though these are useful tools for long-term saving, they are not ideal for an emergency fund that you may need access to more quickly. Also, keeping your money in a savings account makes it much less likely that you will use these savings to pay for everyday, non-emergency expenses. That's why it is usually a mistake to keep your emergency fund in a checking account.

1According to America Saves, a campaign coordinated by the nonprofit Consumer Federation of America (CFA) that is dedicated to helping individuals save money, reduce debt, and build wealth. For more information, visit AmericaSaves.org.

About First Community Bank and Trust
First Community Bank and Trust is a privately owned bank. Established in 1916 First Community Bank and Trust has been serving Beecher, IL, Peotone, IL and the surrounding communities for over 95 years. Our commitment to providing the best banking products and services is matched only by our outstanding customer service. We offer traditional community banking services, including mortgage, consumer, and commercial lending, as well as state of the art electronic banking services.

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Press Contact:
Steven D. Koehn, VP
First Community Bank and Trust
(708) 946-2246