Only 58% of Americans Can Cover 3 Months of Expenses With Savings. Do These 3 Things if You Can't

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  • You never know when a financial emergency might strike.
  • The Financial Health Network found that just 58% of people can cover three months' worth of bills from their savings account.
  • If your savings need work, now's an important time to build them up by cutting your leisure spending, getting a side hustle, and making saving automatic.

Don't neglect your savings -- you might sorely regret it.

Life has a way of surprising us -- in good ways as well as bad. You could be out walking your dog and find a $20 bill lying around -- in which case, hooray, free money. But you could also trip while walking your dog, turn your ankle, and wind up with a $700 emergency room bill.

That's why it's so important to be prepared financially for those unpleasant surprises -- things like home repairs and unemployment. And it's especially important to be prepared for the latter now.

For months on end, financial experts have sounded repeated warnings about a potential recession in 2023. And if the economy takes a turn for the worse, it could spur an uptick in unemployment. That's something you need to be ready for, because if you lose your job, any unemployment benefits you're entitled to won't cover your former paycheck in full.

In fact, as a general rule of thumb, you should make a point to have an emergency fund with enough money to cover a minimum of three months' worth of living expenses. And in light of recession warnings, you may want to set yourself up with a minimum of six months' worth of living expenses in savings. But many people aren't close to that mark.

In a recent report by the Financial Health Network, only 58% of people have enough money in a savings account to cover at least three months' worth of bills. That's down from 61% who said the same in 2021, though it's also a modest improvement from the 56% of people in the same boat in 2020.

Either way, if your savings need a boost, here are some ways to build them up -- and ensure that you have the protection you need.

1. Rethink your leisure spending

There are probably some things you spend money on monthly that are indulgences, not necessities -- things like streaming services, concert tickets, and restaurant meals with friends. To be clear, you deserve to enjoy life, so you shouldn't necessarily deny yourself every little thing that costs extra money. But if your emergency fund needs work, you should seriously rethink your leisure spending for the next few months so you can pump more money into it.

2. Pick up a side hustle

While there's talk of layoffs picking up in 2023 and unemployment becoming more of a problem, right now, the job market is strong. That means you may have a relatively easy time finding yourself a side hustle. You can use that extra money to give your savings a much-needed lift.

3. Make the process automatic

Changing your approach to saving money could make it easier to shore up your cash reserves. Some people spend all of their income on bills and then save what's left over at the end of the money -- that is, if there's even something to save. A better approach may be to put your savings on autopilot. Set up an automatic transfer so money moves from your checking account to your savings with each paycheck you receive. It's a good way to help ensure your savings won't get neglected.

It's important to have a solid level of cash reserves -- at all times, but especially now. If you don't have enough savings to cover at least three months of bills, consider making these changes to buy yourself the protection you deserve.

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