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Does America have a savings crisis?

Four in 10 adults don’t have the funds to cover an unexpected $400 expense, Federal Reserve numbers show.

Experts recommend having $1,000 in savings before paying off high-interest credit cards.(Les Cunliffe/Getty Images)

Americans save so little money that there is an annual week-long campaign to encourage people to put aside cash for financial emergencies.

If faced with an unexpected $400 expense, 4 in 10 adults said they would not have the money to cover it, according to a report last year from the Federal Reserve. To get the funds, they would have to sell something or borrow.

There was a time in the 1970s when the savings rate in the United States was in the double digits. But the most recent figures from the U.S. Bureau of Labor Statistics put it at 6 percent, the lowest level since the 2008 financial crisis. The drop is part of a 60-year downward trend in the personal savings rate, according to the Bureau of Economic Analysis.

How to stop living paycheck to paycheck

America Saves Week, and Military Saves Week, which runs from Feb. 25 until March 2, is a national effort by government agencies, nonprofit organizations and financial institutions to encourage Americans to make saving a priority, reduce their debt and invest for future financial needs. The campaign, managed by the Consumer Federation of America, includes webinars, social media discussions, YouTube talks and saving challenges.

“Life is full of unexpected financial emergencies,” said Carol Kaplan, a spokeswoman for America Saves. “Your car breaks down, your refrigerator dies, a family member gets sick. We need to be prepared for such events to the best of our abilities, without going bankrupt. Life has enough stress as it is. Having a savings cushion relieves a lot of that stress and protects us financially.”

Americans struggle to save for a number of reasons. It’s difficult to put money aside when you’re earning only enough to cover basic necessities. And maybe some of us could save but are living beyond our means.

Others, meanwhile, are concentrating on getting out of debt.

“My bank tried to convince me that I needed to have an automated savings account while I was carrying almost $6,000 on my bank credit card,” wrote Mark Pashia of Missouri. “I refused to do that, as they offered less than 1 percent interest on the savings, while they charged me 12.24 percent on the card balance.”

You have an emergency fund. But where to keep the money until you need it?

Even while diligently paying down debt, you still need savings. Otherwise, in the face of an emergency, your debt will grow.

My explanation still didn’t make mathematical sense to Pashia, who said he would soon pay off the debt.

“My money ‘earned’ more paying on the card than sitting in an account waiting for an emergency,” he argued. “I believe in savings, just not when you are already paying credit-card interest.”

I agree, in part, that you shouldn’t park thousands of dollars in a low-interest savings account when you have credit-card debt. But having savings is like wearing a life jacket, even if you’re a great swimmer. You might not need it, but you’re grateful you have it should you get caught in choppy waters.

If math were all that mattered, then folks wouldn’t be in debt in the first place, paying double-digit interest rates for meals out, movies, clothes or vacations. That makes no financial sense.

Make it a goal to accumulate at least $1,000 in an emergency fund. Once you hit that target, stop saving so you can attack debt.

Here’s a story from a woman who was saved by her saving prowess:

She’s the single parent of three kids in college. The children’s father had a stroke, leaving him unable to lend financial support. At the same time, a broken water line flooded her basement, and during the repair, the contractor found mold, which was not covered under her homeowner’s insurance policy.

“I feel sick about all these things, but I am still able to handle all these costs,” she wrote. “I have an adjusted gross income of $50,000, and I have put away enough money for all these emergencies. It’s important to note that I never got behind, because that makes everything all the more difficult. But giving up little things such as cable and dining out makes a huge difference. People can do this.”

The America Saves campaign is a good place to start. Set a goal and create a plan to achieve it. I don’t want you out there without a life jacket.

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