Save for Emergencies – America Saves Week
February 27th, 2015
MEPC recently examined the challenge that Mississippi households face in preparing for emergencies or future needs, such as a child’s college education or home ownership. This lack of savings makes Mississippians among the most financially vulnerable, particularly in the event of an economic setback like a job loss, health crisis or other income-disrupting emergency, and both a household’s income and net worth provide insight into the extent of this challenge.
Income poverty is a basic indicator of financial insecurity and instability. A household is considered poor if a household’s total income is below the poverty threshold. In Mississippi, thousands of families do not have enough income to meet their basic needs, and household income poverty has remained relatively unchanged for the last two years. Mississippi has the highest income poverty rate in the nation, with 22.6 percent of households living in income poverty (Assets & Opportunity Scorecard, 2015).
Net worth represents the amount of financial cushion a household has to respond to unexpected events, such as a job loss or unexpected medical expenses, as well as take advantage of opportunities like financing higher education, purchasing a home or starting a small business. Mississippi households accumulate fewer assets than households in the rest of the nation – Mississippi ranks second to last, only behind Nevada, in median net worth. The median net worth in Mississippi is $35,302 while the median net worth in the United States is $70,359 (Assets & Opportunity Scorecard, 2015).
An emergency savings fund consists of a small amount of money, usually in a savings account that you do not have easy access to. Saving for this fund starts with small, regularly scheduled contributions that build up over time.
Source: Corporation for Enterprise Development. (2015). Assets and Opportunity Scorecard, 2015.