It’s no secret that the current state of American’s and emergency savings is not good. American’s today have a hard time coming up with the funds to cover an everyday emergency, such as a car repair, medical bill, etc. As financial institutions, we have the opportunity to provide tools and resources to help members to better prepare for unforeseen expenses.
When I first came to Financial Health Federal Credit Union, about 21 years ago, we were a struggling little credit union trying to compete with banks and large credit unions for the same customers and we were not doing that very well. We lacked the expertise, the marketing budget, the branch structure – all of that. We consciously decided to focus our attention on people most banks and credit unions do not want to serve; people who are typically taken advantage of by payday lenders, buy here/pay here car lots, etc. Over the years we have gotten increasingly passionate about that mission.
One of our main areas of focus is helping members who are having trouble setting up an emergency fund. According to a Federal Reserve Survey, about 46 percent of Americans said they did not have enough money to cover a $400 emergency expense. We want to help, which is why we have offered an emergency fund account for a few years now.
There are different concepts for how much money a person should have in their emergency fund. Our concept is that it should be at least one month’s worth of expenses. We offer members planning tools to help them estimate how much they should have in their emergency fund, and then help them determine how much they should save every month or every payday to build that emergency fund. Since we started the emergency fund accounts, members have opened 324 of these accounts and balances are $66,500, an average of $205 per account.continue reading »