The most important financial account you probably don’t have

Financial stress haunts many of us. We say, “If only I had more money?”

At Compass, helping members become more financially confident is a big part of who we are. One step you can take to increase your peace of mind: create an emergency fund.

For those who have limited income or little room in their budget to put money away, an emergency cash reserve may be even more essential than college funds or retirement savings. You may know how many years you are from retiring and how soon the kids will be old enough for college. But, there’s no way to tell when your car’s transmission will begin to slip, your goalie daughter will break a tooth or an arm, or your job will evaporate.

Emergencies happen when we least expect them, and our wallets usually suffer collateral damage.

Here are five steps to reduce your financial stress:

1. Figure out the cost for your monthly “must-haves.” On your most recent checking account statement, circle the amounts you paid for essentials. This means the necessities required for bare-bones living, such as your rent or mortgage payment, groceries, gas, insurance, utilities, credit card and loan payments.

2. Estimate how long you might need to stay afloat in an emergency. Most people should have enough savings to cover for three to six months without a paycheck. You may want to adjust this target up or down if your job would be harder or easier to replace. Let’s say your monthly amount is $2,500, so your emergency savings goal, if three times that, is: $7,500. Mission impossible? Maybe not, if you set up milestones on the way.

3. Make a road map toward your goal. Using $2,500 as an example, you’d get there in about 23 months by putting aside $50 every two weeks. Boost that $50 to $75, and it would take only 15½ months to get to $2,500. Within four years, you could reach your goal of $7,500.

4. Set up “driverless savings.” Once you’ve decided how much to set aside regularly, set up automatic transfers in online banking. Instead of hoping there’s money left to save at the end of each pay period, set it and forget it. That’s a crucial step for success.

5. To manage your stress, keep on saving after you reach your goal. Life is unpredictable, so there may be times you’ll need to draw cash from your emergency account. Just keep squirreling away into your savings, and you’ll replenish your reserve.

Some credit union members like to use our low-interest credit card or equity line of credit as a financial safety net. But when it comes to building confidence, nothing beats having savings in reserve. If you would like to open a separate “Emergency Savings Account”, you can open a secondary savings account online or stop by one of our branches.

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In short, a credit union is a cooperative financial institution where people work together to make everyone’s lives better. Everyone who has an account here is a member. And every member is an owner.

Rather than making profits to send to far-off shareholders, Compass CCU reinvests in our credit union. Which means we reinvest in YOU. That’s why we say that, at Compass Community Credit Union, we guide you to better banking.