Economy

Millennial money: Don’t freak out about your emergency fund

SOUTH FLORIDA TIMES — Let’s be real: For millennials, having an emergency fund is way down on the financial worry list, behind student loan debt, medical bills or saving for a down payment.

Published

6 years ago

March 18, 2019

Oakland Post

By Amrita Jayakumar

Let’s be real: For millennials, having an emergency fund is way down on the financial worry list, behind student loan debt, medical bills or saving for a down payment. Some weeks, it can feel like you barely have enough money to get by, let alone put some away for a rainy day. But that cash stash can be crucial in preventing a debt spiral or keeping you afloat if you lose your job. Regardless of income, building your emergency fund doesn’t have to be intimidating.

START SMALL, BUILD A HABIT

First, pick an amount you can put away on a regular basis, no matter how small. Then, commit to it.

“It can be as little as $10 a week into a separate savings account,” says Lara Lamb, a certified financial planner at Abacus Wealth Partners in Los Angeles. Making a small contribution every week is less painful than shooting for an ideal final sum, she says. Automatically transferring the money to a separate account helps you succeed at saving. The saving habit – even if it’s small – is valuable for your finances in the long term, says Eric Gabor, a certified financial planner at Eagle Grove Advisors in Jersey City, New Jersey.

A family with at least $250 in savings is less likely to face financial turmoil such as a missed utility payment or eviction, according to a 2016 study by the Urban Institute, a Washington, D.C.-based think tank. Any amount above that – $400, $500 – improves your chances of navigating a setback.

Getting started is especially important for younger adults. An Urban Institute study released this year found 35.6 percent of adults ages 18-34 surveyed in December 2017 had experienced “financial insecurity” in the previous 12 months. That was the highest among the study’s three age groups of adults under 65. It defined financial insecurity as the “inability to come up with a small amount of money to buffer negative economic shocks or to pay his or her credit card or non-mortgage loan.”

Lamb suggests working toward one month’s fixed expenses, which includes rent, groceries, transportation and insurance. “Don’t worry about your eating-out money or shopping money,” she says. “If you are in an emergency or a transition, the whole idea is you would cut back on your spending.”

A savings account that pays a high interest rate is a smart place to keep your fund, both planners say, so it can grow.

MAKE USE OF WINDFALLS

An easy way to kick-start your fund is to use windfalls – part of a tax refund or even birthday money from relatives. Young professionals typically get tax refunds instead of owing money, Gabor says. The IRS allows you to direct deposit your refund in up to three accounts, so you can send part directly to your emergency fund.

If no windfall is imminent, check your checking account. Leave a small buffer so that you aren’t at risk of overdrawing and put anything else in the emergency fund to earn interest, Lamb says.

There’s no ideal amount to keep in your checking account. But both financial planners warn that having a lot of extra “cushion” in a checking account carries the temptation to spend it.

PLAN FOR NON-EMERGENCIES

If you’re building the habit of saving for emergencies, use that muscle to plan for other expenses.

Financial experts often use the terms “irregular expenses” and “unplanned expenses.” An unplanned expense is something you don’t foresee, such as an illness or car repair. Irregular expenses are predictable costs that come up during the year – think of car registration fees or holiday season spending.

Ideally, an emergency fund shouldn’t be used for irregular expenses, Lamb says. Instead, build a separate pool of money for them.

“Sit down and look at last year’s worth of spending and look at the things that popped up periodically”’ she says. “Think about the coming year and how that might change. Figure out the annual amount and divide by 12. That dollar amount is what you set aside every month in an irregular expense account.”

USE THE MONEY WHEN YOU NEED IT

Don’t be afraid to use your emergency fund when you need it. Knowing the difference between unplanned and irregular expenses can help you decide when to tap it.

If the alternative is maxing out your credit cards or taking a high-interest loan, it’s cheaper over the long term to use your cash, then immediately start rebuilding the fund.

This article originally appeared in the South Florida Times.

Oakland Post

Posts by Oakland Post

Up Next

Upcoming Origin SC’s Workshops in April 2019

Don't Miss

Autism spectrum disorder situation highlights need for early diagnosis

Oakland Post

Click to comment

Business

Special Interview: Rep. Barbara Lee Discusses Kamala Harris’ Plan for Black Men

On Oct. 16, California Black Media (CBM) spoke with Harris-Walz campaign surrogate, Congresswoman Barbara Lee (D-CA-12), who shared more insights on Harris’ agenda and the importance of securing the Black Male vote. “She has said very clearly that she wants to earn the vote of everyone. And that means earning the vote of Black men,” said Lee of Harris. “She understands the systemic and historic challenges that Black men have. You haven’ t heard of a presidential candidate coming up with a concrete actual plan and policy agenda.” The agenda includes five focus areas based on insights she gleaned from hosting discussions with Black men during her Economic Opportunity Tour.

Published

5 days ago

October 28, 2024

Oakland Post

(File Photo) U.S. Congresswoman Barbara Lee (D-13-Oakland) chides Justices on the Supreme Court of the United States for voting to strike down Affirmative Action. She is shown here speaking in front of the California Reparations Task Force in Oakland on May 6, 2023. CBM photo by Antonio Ray Harvey. By Edward Henderson, California Black Media

By Edward Henderson, California Black Media

Last week, the Kamala Harris campaign released its Opportunity Agenda for Black Men.

“She has said very clearly that she wants to earn the vote of everyone. And that means earning the vote of Black men,” said Lee of Harris. “She understands the systemic and historic challenges that Black men have. You haven’ t heard of a presidential candidate coming up with a concrete actual plan and policy agenda.”

The agenda includes five focus areas based on insights she gleaned from hosting discussions with Black men during her Economic Opportunity Tour:

Provide 1 million loans that are fully forgivable to Black entrepreneurs and others disadvantaged groups to start businesses.
Champion education, training, and mentorship programs that help Black men get good-paying jobs in high-demand industries It will also develop more accessible pathways for Black men to become teachers.
Support a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected.
Launch a National Health Equity Initiative focused on Black men that addresses sickle cell disease, diabetes, mental health, prostate cancer, and other health challenges that disproportionately impact them.
Legalize recreational marijuana and creating opportunities for Black Americans to succeed in this new industry.

“[Vice President Harris] knows that Black men have long felt that too often their voice in our political process has gone unheard and that there is so much untapped ambition and leadership within the Black male community,” the language in the agenda states. “Black men and boys deserve a president who will provide the opportunity to unleash this talent and potential by removing historic barriers to wealth creation, education, employment, earnings, health, and improving the criminal justice system.”

Diving into Harris’ agenda, Lee says, reminded her of her own record of supporting Black men over the years as an elected official. In the 90’s, she established the first California Commission on African American Males through which she pressured the state to address urgent economic, health and social challenges specific to Black men.

“No group of people are a monolithic group of people,” said Lee She’ s not taking any vote for granted. I’ve known her over three decades and I believe she is being herself. She’ s authentic,” Lee added.

Each of the 5 key points addressed in the Harris Campaign’s agenda, Lee says, has additional clauses that can potentially help Black men and their families thrive. This includes lowering rent; up to $25,000 in downpayment help for first time homebuyers; and cutting taxes for Black men in lower-wage jobs by increasing the Earned Income Tax Credit maximum to $1,500.

“I think the messages is one of empowerment for Black men — regardless of whether they’ re a blue-collar worker, if they’ re not working, if they’ re in business, if they’ re an entrepreneur, whatever background or whatever they’re doing or experiencing life. I think the authenticity of their experience can only be articulated through them,” said Lee.

Oakland Post

Posts by Oakland Post

Activism

Oakland’s Asian Community Rallies Against Recall of Mayor Sheng Thao

Thao was speaking at a rally Oct. 15 in Oakland Chinatown, backed by about 100 supporters. “Oakland has seen unprecedented challenges during and since the pandemic, Thao said. “But I stand with you today to tell you that “Oakland has seen 14,000 less crimes this year than last year. This year, we’re headed on the right track,” with fewer homicides than in 2019. “We are saving lives in Oakland. What we are doing work,” she said.

Published

5 days ago

October 28, 2024

Oakland Post

Oakland Mayor Sheng Thao spoke Tuesday, Oct. 15, at a unity rally to oppose the campaign to recall her two years into her four-year term. Photo by Ken Epstein.

“We’re saving lives in Oakland. What we are doing works,” said Mayor Thao

By Ken Epstein

Self-assured and defiant, Mayor Sheng Thao strongly defended her achievements during her first two years as mayor and went on the offensive against billionaires who are funding the recall campaign against her.

Thao was speaking at a rally Oct. 15 in Oakland Chinatown, backed by about 100 supporters.

“Oakland has seen unprecedented challenges during and since the pandemic, Thao said. “But I stand with you today to tell you that “Oakland has seen 14,000 less crimes this year than last year. This year, we’re headed on the right track,” with fewer homicides than in 2019. “We are saving lives in Oakland. What we are doing work,” she said.

Local community and business leaders supporting Thao spoke at the rally, too, which was held in the courtyard of the Pacific Renaissance Plaza in Chinatown. They pushed back on corporate media portrayals of Chinatown residents living in fear of rampant crime and united in opposition to Thao.

“The billionaires, the millionaires, are going to want to tell you that it’s not working and that somehow you shouldn’t believe the data,” Thao continued. “(However) the data shows that we are saving lives. That is a huge win. It’s not good enough. But it’s a place where we’re proud to start from.”

“You know who is behind this recall. It is majority funded by one executive (of a) hedge fund who doesn’t even live in Oakland. He does not care if this brings Oakland into chaos, because that’s exactly what his recall will do. Imagine a city with no leadership (for many months),” added Thao.

Another speaker, Stewart Chen, owner of a small business in Chinatown and a prominent political leader, has taken a strong stand against the recall.

“Mayor Thao (was) in office for less than two months before the recall started. I think it’s unfair. She hasn’t had time to prove her policies and her leadership,” Chen said.

“(Only) two months. That is not democratic. She campaigned hard and was duly elected, -justly, legally, democratically,” he said.

“The Chinatown community, we’re all here, (because) we want to see Mayor Thao (here) for the next two years” to complete her term, Chen said.

Other speakers included Kenneth Tang, organizing director of Asian Pacific Environmental Network (APEN) Action – who said he and other APEN Action members came to the rally because, “We support Mayor Thao.”

Elaine Peng, president of Asian Americans for Progressive Alameda, (AAPA) brought out people to the rally. Her organization is also actively working to elect U.S. Vice President Kamala Harris.

Mariano Contreras of the Latino Task Force and a leader of the “Respect Our Vote – No Recalls!” coalition, said, “There was a time when African Americans could not vote. There was a time when Asians could not vote. There was a time when Latinos could not vote. That was called voter suppression. This is another form of voter suppression. We already cast our ballot for Mayor Sheng Thao. Please, vote ‘no’ on the recall.”

Oakland Post

Posts by Oakland Post

Activism

Oakland’s Clergy Leaders Say ‘No’ Vote to Recall of Mayor Sheng Thao

“The recall of the mayor is not needed and ill-founded. Oakland does not need chaos. Oakland does not need coal dust in the air,” said Pastor Jim Hopkins of Lake Shore Avenue Baptist Church. The pastor was referring to recall funder and hedge fund partner Phillip Dreyfuss, whose company has several billions of dollars invested in the coal industry at a time when Oakland is resisting the construction of a coal export terminal in the city.

Published

5 days ago

October 28, 2024

Oakland Post

Oakland Mayor Sheng Thao thanked more than 100 faith leaders who say a recall is unfair. Photo by Kevin Hicks.

By Post Staff

Local faith leaders spoke out at a press conference this week at the Democratic Party Election Headquarters office in Oakland to express their support for Mayor Sheng Thao.

They also urged Oakland residents to vote “No” on the recall on the Nov. 5 ballot.

The leaders in this interfaith coalition, representing the diversity of Oakland’s religious community, organized the press conference on Oct. 22 to show they are standing united against the recall. Speakers said they were concerned that a successful recall would throw the city and its finances into chaos.

If the recall were successful, the city would have five mayors in three years, creating dysfunction at a time the city desperately needs stable leadership to focus on its budget and continue to make progress on public safety, the leaders emphasized.

“The recall of the mayor is not needed and ill-founded. Oakland does not need chaos. Oakland does not need coal dust in the air,” said Pastor Jim Hopkins of Lake Shore Avenue Baptist Church.

The pastor was referring to recall funder and hedge fund partner Phillip Dreyfuss, whose company has several billions of dollars invested in the coal industry at a time when Oakland is resisting the construction of a coal export terminal in the city.

“I love Oakland, and we need to get behind our leadership. I’m excited we have a mayor who is concerned about the people of Oakland,” said Bishop Greg Payton of St. John’s Missionary Baptist Church in West Oakland.

Said Pastor Joe Smith of Good Hope Baptist Church in East Oakland, “Our homicides are down. Police force not fully staffed. She has the rate down. Black and Brown boys not getting killed. Mayor Thao has done this. United we stand, divided we fall. I’m here to say ‘No’ on the recall. I don’t believe in recalls. We have a good Mayor. Let’s stand with her.”

Speaking at the press conference, Mayor Sheng Thao said she has taken major steps to increase public safety, significantly reducing crime in the city. In addition, Thao added. “In less than two years, I’ve already invested in West Oakland, and in Deep East Oakland, (and) new investments are set to bring billions to the city,” Mayor Thao said

Many community organizations and leaders have stood with the mayor since the “No on the Recall” campaign launched on Oct. 6.

Those opposing the recall include the Alameda County Democratic Party, Rep Barbara Lee (D-CA-12), Sen. Nancy Skinner (D-Berkeley), Alameda County Supervisor Keith Carson, former Assemblymember Sandré Swanson, Oakland City Councilmember Carroll Fife, Oakland City Councilmember Dan Kalb, and 12 of the 16 candidates running for Oakland City Council.

In addition, a range of unions and political organizations have taken a stand against the recall effort, including the Alameda Labor Council, SEIU 1021, IFPTE Local 21, Alameda County Fire Fighters, NorCal Carpenters Union, as well as Oakland Rising Action, APEN (Asian Pacific Environmental Network), John George Democratic Club, Wellstone Democratic Club, the Latino Task Force, and others.