Living Well: Savings—Why. How. Now.

If an expensive emergency came up, would you be ready to manage it?  According to a report from the American Psychological Association, 72 percent of adults feel stressed about money at least some of the time and 22 percent experience extreme financial stress. Not only can chronic stress cause health to suffer directly, it can also cause us to make unhealthy choices in an effort to manage that stress (e.g., overeating or zoning out in front of screens).

According to the Consumer Financial Protection Bureau, financial well-being can be summed up as having security and freedom of choice, both in the present and the future. Using this framework, they identify four key elements of financial well-being:

• Feeling in control = Having financial security, in the present.
• Capacity to absorb a financial shock = Feeling financial security, for the future.
• On track to meet goals = Moving toward financial freedom, for the future.
• Flexibility to make choices = Having financial freedom, in the present.

Obviously, some factors are within a person’s control, and some aren’t (e.g., systemic, socioeconomic, etc.). So, it’s important to focus on the areas where we do have control.

This month let’s focus on the capability to absorb a financial shock. Life’s unexpected circumstances don’t come with a warning. Being prepared for unexpected costs or emergencies can keep us from feeling knocked off balance when something unexpected happens; and having extra money saved for unplanned situations will provide support when you need it most.

Create a habit of putting some money toward your emergency fund. If you keep it up consistently, even if it’s just a little each week or month, the habit will pay off.