For some time now, in each edition of Aim, I have commented on everyday financial matters that affect members. On some occasions, I’ve used this column to announce new Credit Union products. For this issue, I have no new financial services to announce. Instead, I want to talk about a product that’s been around a long time: an LGFCU Share Account.
We believe LGFCU’s Share Account can be the foundation of a household savings plan. Here’s what we mean by this. Members often ask me how much they should have in savings. I’ve heard all sorts of advice, including a person should have an amount equal to six months of salary set aside in an emergency fund. For some members, this is a tall order.
The importance of an emergency fund
Instead, we think every household should have sufficient savings to at least withstand a typical financial emergency (e.g. broken appliance, unexpected car repair or medical need). The federal government uses $400 as the amount needed to meet most short-term emergencies. The Federal Reserve says 47% of consumers can’t meet a $400 emergency without borrowing money or selling something.
We’ve discovered 49% of our members have less than $500 in total savings. Looking a bit closer, we see almost half of these members have less than $30 in a Share Account. This concerns us because these households may have less than the needed resources for financial emergencies.
These statistics suggest some members need to put away more savings. The key factor here is how the Credit Union can help. One of the most effective ways to save is through an automated plan like LGFCU’s Payroll Deduction. A fixed amount from your paycheck is deposited into a Share Account.
For members who don’t have payroll deduction, we offer Funds Transfer. Any amount can be transferred from one Credit Union account (e.g. Checking Account) to another such as a Share Account. You choose the amount, frequency and time of month for the transfer, within regulatory limits.
In any instance, LGFCU is a great place to park your savings.
If you’re part of the 47% who would have difficulty meeting a $400 emergency, call or visit your local branch so we can help you get prepared.