News Talk 94.1/AM 1600 Where The Upper Cumberland Talks
A UT Consumer Sciences Expert said a new report that shows too many of us are not ready for a monetary emergency, is not a surprise.
Putnam County Extension Director Michelle Parrott said the time to start being proactive rather than reactive is now. The new Bankrate report revealed 59 percent of Americans lack the savings to cover an unexpected 1,000-dollar expense.
“It’s really hard to get out of that cycle when you’re living paycheck to paycheck,” Parrot said. “And paying those bills each time when that money comes in and you don’t have any extra, or you don’t feel like, I guess I should say, that you have any extra to put towards what we call an emergency fund or an emergency savings account.”
Parrot said the bottom line to overcoming this mindset comes down to two options, make more money or spend less. She said many people make errors in their spending due to misconceptions about how much they spend. Parrot said a way to start savings is to be honest with yourself by reviewing your spending plan.
“There’s no universal plan that works for everybody, but what does work for everybody is making that spending plan,” Parrot said. “Sometimes I don’t call it a budget because it seems so restrictive. When you talk about a spending plan it’s like hey, this is how my plan on how I’m spending my money, and then you can write everything down and see where it is going.”
Parrot said for those truly trying to make a change, grab a pencil or your phone and for a week, write down everything you buy. Parrot said this means everything. Parrot said doing this is going to show unnecessary spending mistakes.
“There may be a pitfall somewhere in that spending plan where you’re losing an extra five, ten, fifteen dollars that could really go towards that emergency fund you’re trying to create,” Parrot said. “Because what you’re looking for, truly, is three to six months of money set aside.”
Parrot said the goal is to be successful and start building an emergency fund for your household. Parrot also said the journey can seem impossible so celebrating minor wins is meaningful, such as bringing your lunch to work every day, a little action that save money.
“Sometimes you can get frustrated with all those different topics, ‘I’m not getting anywhere, I’m not saving anything, I’m not building these savings that I really wanted to do,’ that’s why you want to celebrate those small successes,” Parrot said. “Because when you feel good about it, you really try to, I think continue that.”
