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The Importance of an Emergency Savings Account
Resources The Importance of an Emergency Savings Account

Katie and James were thrilled to be first-time homeowners. They couldn’t wait to tackle their list of improvement projects to put their very own stamp on an older home. Before they could start, however, the water heater went cold and the refrigerator went hot. Their "home improvement" stash of cash quickly became their "emergency repairs" account.

Theresa, an up-and-coming marketing executive, was surprised to learn the company she worked for had been sold — with a reorganization plan that left her without a position. On a positive note, she viewed this as an opportunity to discover her next career move. At the same time, she was relieved she had six months’ worth of living expenses already saved.

Emergencies happen when you least expect, and often when you cannot afford them. It’s important to be prepared for a financial emergency with a savings account just for this purpose. Experts recommend saving at least three to six months' worth of living expenses, or up to 12 months' for self-employed individuals and executives, in an easily accessible account. But where do you find that extra cash to start building those savings?

Identify Needs vs. Wants

Living expenses include everything you spend your money on in a month, not just your bills, and can generally be divided into two categories: needs vs. wants. By proactively tracking your living expenses, you have taken one of the most important steps toward building your emergency savings account.

Athens Federal Community Bank offers tools to track spending, including the Financial Management Tool within Online Banking. The next step is to honestly assess your needs, like paying your electric bill, versus wants, like dining out. Then determine where you can save each month. Even a small monthly sum of $25 will add up over time.

Pay down high-interest debt

Having high-interest debt, e.g. credit card balances that aren’t paid off each month, can erode the effect of your savings. As you divert extra dollars that were identified in your personal monthly spending plan to build your emergency savings, we recommend you continue to reduce high interest debt by paying more than the required minimum monthly payment. Once you have paid off this debt, divert these extra dollars to your emergency savings account as well.

Knowing you have a strong financial safety net in a liquid savings account will bring you significant peace of mind.

Use direct deposit or automatic transfers from your checking account to build your emergency fund, little-by-little, in an interest-earning savings account.

Ready to build your emergency fund?

Make saving a top priority by choosing the most appropriate Athens Federal account. Click on any of our products below to get specific information and to see what will help build your fund.

Savings account — This type of account provides principal security along with the ability to earn compounding monthly interest on your savings.

Money market account — May earn a higher-interest as balances grow, which will help your savings add up quickly.

Certificates of deposit (CDs) — We offer a number of CDs with varying terms and minimum balances to help you grow your savings.


Ready to start your emergency savings plan? Check out our Savings and Money Market options.

To get started, try our savings calculators or call one of our customer service representatives at 1-800-526-3572.