Most people know the sinking feeling that comes with an unexpected expense. Whether it’s a car problem, a medical bill or a costly home repair, a surprise can quickly drain your bank account. Having three to six months of savings to cover unforeseen costs is the general recommendation from financial experts, but for many, that isn’t the reality.
According to an Empower study, more than one-fifth (21%) have no emergency fund, while a CreditOne Bank survey found that more than half (51%) rely on a credit card to cover a $500 emergency expense.
To help ease financial burdens, a provision in the Secure 2.0 Act allows people with a 401(k) to withdraw up to $ 1,000 penalty-free for emergency expenses. Here’s how it works.
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