Money Expert Rachel Cruze: 3 Key Reasons You Need To Prioritize Emergency Savings

The past several years have been nothing short of a financial rollercoaster. The COVID-19 pandemic sent the U.S. economy into a tailspin, which ultimately resulted in millions of Americans losing their jobs, sky-high inflation and an increase in the cost of just about everything.

If the pandemic taught us anything, it’s that maintaining an emergency fund is so important perhaps now more than ever before. However, many Americans are not prepared.

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In a recent Instagram reel , financial expert Rachel Cruze said about one-third of Americans cannot afford a $400 emergency expense in cash. What’s more? The Currency explained that 21% of Americans have no emergency savings at all and the median emergency savings for Americans is only $600.

If you fall into this category, you’ll definitely want to get out of this situation. Here are three key reasons to prioritize building an emergency fund as soon as possible .

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You’ll Feel a Sense of Peace

According to a recent Ramsey Solutions research study , 54% of Americans worry daily about their financial situation. And 34% of them have no savings at all. Building your emergency fund should provide a sense of financial peace and relieve a lot of the anxiety you might be having about your financial situation. Be sure to park your emergency savings in a high-yield savings account so you earn interest on your funds and benefit from compound interest along the way.

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You’ll Be Financially Prepared

Building an emergency fund means you’ll be prepared for all the expenses that might come. Whether it’s a surprise medical bill, a roof repair or if your car breaks down, you don’t want to be caught without the necessary funds to cover the costs. Otherwise, this could mean putting yourself in credit card debt (which is never good). Aim to save at least $1,000 as quickly as possible.

You’ll Avoid Reliance on Credit Cards

A lack of emergency funds can easily equate to a reliance on credit cards to make ends meet. It’s never okay to rely on credit cards as your de facto emergency fund. If you have a huge unexpected expense that you simply charge to your credit card without the necessary funds to actually pay for it, you’ll land yourself in debt fast.

This article originally appeared on GOBankingRates.com : Money Expert Rachel Cruze: 3 Key Reasons You Need To Prioritize Emergency Savings