Welcome to Day 1 of America Saves Week 2013! Moven is thrilled to be among the thousands of organizations coming together to promote healthy savings behavior in America. Every year this important campaign reaches millions of Americans with a message about the importance of saving. Stay tuned to the Movenblog this week for great tips for integrating savings into your daily life. Whether you’re a new grad, or coming up on retirement, we’ve got some great advice for you!

Get in on the conversation! Share your best tips for saving on Twitter by tagging @AmericaSaves and #ASW2013, and don’t forget to join in on the Moven Facebook page!

Today we’re talking about saving for emergencies. It’s something that few us talk openly about, but many of us will experience an emergency at some point in our lives.

Whether it’s the loss of a home through disaster, an illness in the family, or an unexpected job loss, emergencies and surprises are a reality that we must all be prepared for. So how is it that nearly half of Americans are only one financial emergency away from financial disaster?

Part of the problem is that many of us don’t understand how precarious our financial situation might actually be. Here are three common signs that you are not prepared for a financial emergency, along with some tips on how to get moving in the right direction!

1. You Rely on Credit to Pay for Basics

Demos published a study in 2012 on ‘The Plastic Safety Net’ in America, and uncovered some shocking numbers. They found that 40% of low to moderate-income households used credit cards to cover basic needs like rent, mortgages, utilities, and groceries. This number jumped to 45% among households with annual incomes less than $50,000.

If you are using credit to pay for basic living expenses, you are leaving yourself vulnerable in the event of a financial emergency, especially if you don’t have an emergency fund. Kimberly Palmer, author of Generation Earn, explains that even if you have significant debt, an emergency fund should be a top priority.

“At a time when credit is tight,” Kimberly explains, “we can’t necessarily count on credit cards and other sources of loans to be there when we need them, so we need our own stash of cash for these types of emergencies”. Even if you can only spare $10 from every paycheck for savings, prioritizing your emergency fund is an important habit to develop.

2. You Could Not Survive for Three Months on the Balance of Your Account

Any financial guru worth their salt will tell you that you need to have at least three months of living expenses saved (in cash) that you will not touch, except in cases of emergency. Many people make the mistake of using a line of credit as their ‘emergency fund’. This fund would be used to help cover living expenses should you find yourself unable to work, or cover unexpected critical expenses like emergency repairs to your home.

By making your emergency fund a priority, you are investing in your long-term stability - in your ability to weather life’s little storms without having to sacrifice your goals and aspirations.

So, how much should you have in your emergency fund? “Add up your monthly expenses”, suggestsMiranda Marquit. “Make sure you include your housing and utility payments, and your debt payments. Use your past two or three months’ expenses as a guide for estimating what you spend on groceries”. Once you’ve calculated your monthly expenses, multiply that by the number of months that you want to cover.

3. You Don’t Actually Know How Much You Spend Each Month

If you don’t have a firm handle on the amount of money coming and going out of your bank account each month, it is nearly impossible to be prepared for a financial emergency. At a minimum, you need to know the answer to these four questions:

1. How much do you make (before and after taxes) each month?
2. How much do you spend on survival expenses (shelter, food, health, etc.) each month?
3. How much do you spend on non-essential expenses each month?
3. How much do you put into savings every month?

Armed with this information, you will be able to determine not only how much you need to save to be prepared for an emergency, but you will be better able to determine the percentage of your income that you are able to put away into savings each month.

Often, once we see the numbers in black and white, we are in a better position to make choices about our lifestyle and savings habits. Getting up close and personal with your numbers will also help you find unexpected savings opportunities, like trading in your cab rides for an affordable monthly bus pass.

Instead of seeing putting your hard-earned cash into an emergency fund as a short-term sacrifice, think of it as a long-term investment. Building an emergency fund is essentially buying peace of mind and confidence - what could be more valuable than that?

Do you have savings tips to share? Post them below, or join @getMoven on Twitter with the #ASW2013 hashtag!

Photo Credit: America Saves Week