Finance
Do you have the top predictor for financial well-being? Here’s what Vanguard’s research says.
It doesn’t take $1 million to achieve the top predictor of financial well-being, according to new research from investment firm Vanguard. Instead, it’s something far more attainable: Socking away at least $2,000 in an emergency savings account.
People with at least $2,000 saved for an unexpected expense report a greater improvement in financial well-being than those who have incomes of more than $500,000 or assets of more than $1 million, the survey of more than 12,000 Vanguard investors found.
The findings come as many Americans are feeling more financially stressed, with a separate study from Primerica finding that about half of middle-class households expect to be worse off financially in 2026, almost double the share in December, due to worries about the cost of living and the economy. Taking small steps to build an emergency savings account could prove to help alleviate financial anxiety, noted Paulo Costa, a behavioral economist and certified financial planner at Vanguard who co-authored the research.
“What’s so powerful about this research is that it’s not about gathering a lot of money to have that peace of mind,” Costa told CBS MoneyWatch. “That initial $2,000 makes a big difference.”
While it may seem that having $1 million in assets should boost financial well-being more than $2,000 in a savings account, the results show the importance of being prepared for an unplanned expense, Costa added. The median cost of an emergency is about $2,000, which means having that cash on hand gives people the confidence that they can handle a sudden money stressor, he said.
“When is $2,000 more than a million dollars? It’s when it comes to emergency savings,” Costa said. “The point of emergency savings is to have that money readily available if you need it. A lot of people have money, for example, in retirement accounts that may have some requirements about when you can withdraw that money and may have some tax consequences and some penalties.”
Retirement assets are generally not readily available to cover unexpected expenses, with people younger than 59 1/2 incurring a 10% penalty for taking out money. But having $2,000 set aside in a bank account means that you’ve got the peace of mind that you’ll be able to handle a surprise car repair or medical bill.
And people with $2,000 in emergency savings typically spend about 2 hours less each week thinking about their finances versus those without any savings, the study found.
How many people can handle emergency expenses?
To be sure, obtaining $2,000 in savings could prove out of reach for many Americans, especially those who are low income, struggling with debt or who reside in an area with a high cost of living. Vanguard’s survey includes only people who have investment accounts at the company, which signals they access to 401(k)s and other types of investment accounts that many Americans lack.
Almost 4 in 10 Americans say they don’t have the cash on hand to pay for an $400 emergency expense, according to research from the Federal Reserve.
Still, more Americans appear to be socking away money for a rainy day, with the Primerica study finding that 64% of those surveyed in March said they had an emergency fund of at least $1,000, up from 58% two years earlier.
Even if saving $2,000 seems out of reach, you can start small by saving as little as $10 week, Costa said. The best idea is to find a strategy that works for you, whether that’s budgeting or automating savings by directing a certain amount into a dedicated account with each paycheck, he said.
“I love the idea of, ‘out of sight, out of mind,’ so when you get paid, you immediately send money to your savings account,” he said. “By saving $50 per week, you will build up to $2,000 in less than a year.”
He added, “Saving something is better than saving nothing. So just getting started, that really makes a big difference.”
Finance
'There Could Be A Whole Other Life He's Living' 'The Ramsey Show' Host Says After Wife Finds $209K Debt Behind Her Back
Finance
Will Trump’s US$200 Billion MBS Purchase Directive Reshape Federal National Mortgage Association’s (FNMA) Core Narrative?
HOLYOKE — The City Council has advanced plans to create a finance and administration department, voting to send proposed changes to a subcommittee for further review.
The move follows guidance from the state Division of Local Services aimed at strengthening the city’s internal cash controls, defining clear lines of accountability, and making sure staff have the appropriate education and skill level for their financial roles.
On Tuesday, Councilor Meg Magrath-Smith, who filed the order, said the council needed to change some wording about qualifications based on advice from the human resources department before sending it to the ordinance committee for review.
The committee will discuss and vote on the matter before it can head back to the full City Council for a vote. It meets next Tuesday. The next council meeting is scheduled for Jan. 20.
On Monday, Mayor Joshua Garcia said in his inaugural address that he plans to continue advancing his Municipal Finance Modernization Act.
Last spring, Garcia introduced two budget plans: one showing the current $180 million cost of running the city, and another projecting savings if Holyoke adopted the finance act.
Key proposed changes include realigning departments to meet modern needs, renaming positions and reassigning duties, fixing problems found in decades of audits, and using technology to improve workflow and service.
Garcia said the plan aims to also make government more efficient and accountable by boosting oversight of the mayor and finance departments, requiring audits of all city functions, enforcing penalties for policy violations, and adding fraud protections with stronger reporting.
Other steps included changing the city treasurer from an elected to an appointed position, a measure approved in a special election last January.
Additionally, the city would adopt a financial management policies manual, create a consolidated Finance Department and hire a chief administrative and financial officer to handle forecasting, capital planning and informed decision-making.
Garcia said that the state has suggested creating the CAFO position for almost 20 years and called on the City Council to pass the reform before the end of this fiscal year, so that it can be in place by July 1.
In a previous interview, City Council President Tessa Murphy-Romboletti said nine votes were needed to adopt the financial reform.
She also said past problems stemmed from a lack of proper systems and checks, an issue the city has dealt with since the 1970s.
The mayor would choose this officer, and the City Council will approve the appointment, she said.
In October, the City Council narrowly rejected the finance act in an 8-5 vote.
Supporters ― Michael Sullivan, Israel Rivera, Jenny Rivera, Murphy-Romboletti, Anderson Burgos, former Councilor Kocayne Givner, Patti Devine and Magrath-Smith ― said the city needs modernization and greater transparency.
Opponents ― Howard Greaney Jr., Linda Vacon, former Councilors David Bartley, Kevin Jourdain and Carmen Ocasio — said a qualified treasurer should be appointed first.
Vacon said then the treasurer’s office was “a mess,” and that the city should “fix” one department before “mixing it with another.”
The City Council also clashed over fixes, as the state stopped sending millions in monthly aid because the city hadn’t finished basic financial paperwork for three years.
The main problem came from delays in financial reports from the treasurer’s office.
Holyoke had a history of late filings. For six of the past eight years, the city delayed its required annual financial report, and five times in the past, the state withheld aid.
Council disputes over job descriptions, salaries and reforms also stalled progress.
In November, millions in state aid began flowing back to Holyoke after the city made some progress in closing out its books.
The state had withheld nearly $29 million for four months but even with aid restored, Holyoke still faces big financial problems, the Division of Local Services said.
Detroit Red Wings blank Montreal Canadiens behind John Gibson
Watch Bob Weir Perform ‘Touch of Grey’ with Dead and Co. at His Final Live Appearance
Man dies after dog attack in Dallas home, police say
Miami‑Dade crowds join nationwide protests after deadly ICE shooting
Red Sox shed light on plans for outfield, including Ceddanne Rafaela’s role
Florida High School Football Rankings: Top 25 teams – Oct. 21
Cleary's 21 help Le Moyne down Central Connecticut State 69-64 in OT
How old is Bo Nix? What to know about Oregon quarterback ahead of 2024 NFL Draft
99th annual Pony Swim held in Virginia
Video: ‘It Didn’t Have to Happen This Way:’ U.Va. Faculty Call for Review of Police Response to Protests
Video: Raising a Baby in Altadena’s Ashes
Trump signs order to protect Venezuela oil revenue held in US accounts
What Canada, accustomed to extreme winters, can teach Europe
New video shows fatal Minnesota ICE shooting from officer’s perspective
Federal judge blocks Trump from cutting childcare funds to Democratic states over fraud concerns
-
Detroit, MI1 week ago2 hospitalized after shooting on Lodge Freeway in Detroit
-
Technology4 days agoPower bank feature creep is out of control
-
Dallas, TX6 days agoDefensive coordinator candidates who could improve Cowboys’ brutal secondary in 2026
-
Dallas, TX2 days agoAnti-ICE protest outside Dallas City Hall follows deadly shooting in Minneapolis
-
Iowa4 days agoPat McAfee praises Audi Crooks, plays hype song for Iowa State star
-
Delaware2 days agoMERR responds to dead humpback whale washed up near Bethany Beach
-
Health6 days agoViral New Year reset routine is helping people adopt healthier habits
-
Nebraska4 days agoOregon State LB transfer Dexter Foster commits to Nebraska