Americans Without Emergency Funds

There's an old economist joke about the difference between an economic recession and depression that goes like this, "A recession is when your neighbor loses his job, a depression is when you lose yours." That joke came to mind when I recently read a Smart On Money article about the small amounts of emergency funds in the accounts of some Americans. If I remember correctly, I think something like one out of every four Americans does not even have an emergency savings account with several months worth of living expenses in it. Obviously, this is very dangerous. In tough economic times, it's very unwise to have the attitude of 'That can't possibly happen to me.' If you have no emergency savings account, I would recommend allocating 5% of each paycheck to a savings account, and 10% of each paycheck to a retirement account. Diligently saving is the secret to long-term wealth and stability, and nothing will lead you to bankruptcy as quickly as a lack of liquidity that wipes you out with a stroke of bad luck. If you want to check out the Smart On Money article, click here: http://www.smartonmoney.com/do-you-have-savings-in-case-of-an-emergency-1-in-4-americans-have-zero-emergency-savings/ .