The full explanation
The CFPB explains that without savings, even a small financial shock can push you into debt that is hard to pay off. How much you need depends on your situation; the CFPB suggests thinking about the unexpected expenses you have had before. You can keep it in a bank or credit union account, on a prepaid card or in cash, and it grows more easily with automatic saving or part of a tax refund.
An example
Every two weeks, Elena automatically moves a small amount from her checking account to a savings account. When the refrigerator breaks, she pays for the repair from that fund instead of the credit card.
You will see it in…
- Your monthly budget and savings plan
- The savings accounts at your bank or credit union
- Our savings tools
