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Is There an Emergency About Emergency Savings?
Emergency savings seems to be much on people’s minds these days – but if there’s little disputing the importance of having funds set aside for such things, there is some question as to how much that should be.
The concept of emergency savings is usually presented in the context of a statistic from the Federal Reserve’s annual Survey of Household Economics. More specifically, every year since 2012, economists from the Board of Governors of the Federal Reserve System have asked a series of consumer-finance questions to a representative sample of U.S. adults through the Survey of Household Economics and Decisionmaking (“SHED”).
While the survey asks more than 100 questions on a range of topics related to household financial well-being, the question about the ability[i] to pay for a $400 emergency expense has garnered regular attention from the media, policymakers, and the broader public - and along the way, has become a “go-to” data barometer for measuring the financial fragility of Americans.
That said, a series of legislative proposals designed to encourage/create emergency savings have generally established limits well beyond that $400 figure. This week, we’d like to get your take on emergency savings accounts – and how much and how far you think legislation should go in establishing/fostering this approach.