Financial emergencies are a part of life, whether in the form of car problems, home repairs, or costly injuries. In fact, 34% of U.S. households were forced to deal with a major unexpected expense over the past year -- yet only 39% have the savings for a $1,000 outlay. That's the latest from a new Bankrate survey, which found that the bulk of Americans continue to walk around financially vulnerable.

Specifically, when asked how they'd cover a $1,000 emergency, only 39% of adults said they'd simply withdraw the funds from a bank account. Meanwhile, 19% said they'd reach for a credit card to pay off the expense over time, 12% said they'd borrow the money from family or friends, and 5% said they'd take out a personal loan.

Man looking at his phone while standing next to a car with its hood up


Worse yet, $1,000 is a lowball estimate when it comes to unplanned expenses. Bankrate reports that the average financial emergency generally constitutes a $2,500 blow at a minimum -- an amount most Americans aren't even close to having on hand.

If you're among the countless Americans without a decent chunk of emergency savings, it's time to start doing better. Otherwise, you risk hurting your finances irreparably when the inevitable does indeed strike.

How much do you need for emergencies?

You might think that having $1,000 stashed away in the bank is a pretty decent financial situation to be in. But while having access to $1,000 is better than having no money to your name at all, it's still a far cry from the level of near-term savings you should be aiming for.

As a general rule, a solid emergency fund is one with enough money to cover three to six months' worth of living expenses. Why the need for such a sizable sum? It boils down to this: You never when you might fall ill, lose your job, or face some sort of extended circumstance where you're unable to work and earn an income. Similarly, you never know what surprises life might have in store for you. You could drive your brand-new car out of the dealership lot and get in a fender bender or come home to a basement of leaking pipes. And the only way to protect yourself from these and other unanticipated costs is to have a decent chunk of money in the bank.

Credit cards are bad news

Now you may be thinking, "So what if I don't have much savings? If an unplanned bill lands in my lap, I'll just charge it on a credit card." But that's exactly what gets so many Americans into trouble year after year.

The problem with relying on credit cards for emergencies is that if you're unable to pay your bill in full by the time it comes due, you'll immediately start accruing hefty interest charges that can quickly add up. Remember, just like the money in your savings account earns interest, thus adding to your balance, so too does your outstanding credit card debt accrue interest. Only whereas savings account interest works in your favor, credit card interest works against you so that you end up owing way more than you originally charged in the first place.

Furthermore, while you might collect something in the ballpark of 1% interest on your savings, you might easily get charged 20% interest or more by a credit card company. And that's exactly why so many people who get into debt have trouble shaking it.

Building your savings

Hopefully, by now you're convinced that you need savings on hand for when an emergency strikes. The question is, how do you go from $0 to, say, $5,000 overnight?

The answer is that you don't. Unless you come upon a windfall, reaching that level of savings is apt to take work, but the sooner you begin making strides, the closer you'll be to hitting your personal goal. To start, create a budget that maps out your monthly expenses. This will allow you to compare the amount you earn to the amount you spend. It'll also help you identify areas where you can get away with spending less. For example, while you can't waltz over to your landlord and start paying $200 less per month in rent, you can take the $300 you normally spend on leisure and cut it in half.

Saving money generally boils down to making choices, so it'll be up to you to decide which expenses to reduce. On top of that, consider picking up a side hustle -- something 44 million Americans are currently doing. Boosting your income is a great way to reach your savings goal sooner, and the more additional cash you rake in, the less expense-slashing you'll have to do.

No matter what strategy you use to build savings, the key is to make it a priority before a whopping expense comes up and bites you. Otherwise, you'll have few decent choices at your disposal when that day eventually arrives.

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