No one can predict the future. That’s why a successful financial plan prepares you for the unexpected.
TD Bank’s 2025 Financial Preparedness Survey found that 86% of respondents think about their financial preparedness at least monthly. However, many also admitted feeling like they could not handle future problems as they come up. For example, 36% of Americans said they are not confident they have enough savings to pay for an unexpected bill.
Financial preparedness can span many different aspects of money management, including covering emergency bills, managing debt, and saving for retirement. It’s also more urgent than ever, given stock market volatility, economic uncertainty, and the rise of natural disasters.
If you want to step up your financial preparedness, here are four areas to prioritize.
Emergency funds and savings for a rainy day
The TD Bank report found that the leading definition of financial preparedness for Americans is having enough savings for emergencies. 65% of respondents said recent natural disasters and severe weather make saving for emergencies more urgent. This makes sense, as 2024 was one of the worst years ever for natural disasters in the United States.
A rule of thumb is to have three to six months of living expenses in cash savings to be prepared for an emergency. That way, you have reserves for a surprise medical bill, a car repair, or a job loss.
Unfortunately, most respondents don’t feel they are quite there yet with their emergency funds. Only 36% say they have enough to cover four months of living expenses.
Respondents realize this is important and have taken action. Roughly half have set a budget, and 77% save money regularly. Budget apps and banking tools were ranked as a top solution for finding ways to save more money.
41% of respondents said they used automated savings tools, including automatic deposits, automatic transfers, and round-up deposits. These gradually build up your emergency savings without you even realizing it.
Credit and debt
Being debt-free or having manageable debt was the second most selected definition of financial preparedness.
These top two definitions go hand-in-hand. When people don’t have enough savings, they may be forced to use credit cards and other costly short-term debt to pay surprise bills.
Financial strain can also lead to missing credit card and loan payments, which results in costly penalties, higher interest rates and credit score damage, making it hard to qualify for financing in the future. Protecting your credit against these negative impacts is another reason to prioritize financial preparedness.
Most respondents take managing their credit seriously. 73% said they have taken steps to improve their score by paying down debt and setting up automatic payments to avoid accidental late payments.
Paying attention is also essential. 57% check their credit card balances either daily or weekly. That can help them avoid spending past their credit limit and find ways to cut back on unnecessary spending.
However, people check their credit reports less frequently. It’s also important to regularly review your credit report to see how you’re doing and catch mistakes that could unfairly damage your score.
Retirement
Saving for retirement was rated as another important aspect of financial preparedness.
Most respondents are putting money aside, as 85% report having some retirement savings. However, only 38% feel their retirement savings are on track.
Consistent budgeting is key for retirement planning. The earlier someone starts saving money and the more they put aside each year, the better the chance they’ll reach the retirement of their dreams, especially if they use the tax breaks from a workplace or individual retirement plan.
That said, recent market volatility may have scared investors from contributing. The key is to keep a long-term focus and continue saving for the future, regardless of the current market environment. Focus on your lifelong goals instead of what’s in today’s headlines.
Homeownership
Owning a home is widely seen as achieving the American dream, and 90% of survey respondents agree. However, affordability remains a top barrier. Housing prices have risen substantially over the past five years, and mortgage interest rates remain high by recent historical standards. No wonder only 26% of non-homeowners have a positive outlook on their ability to own a home one day.
While homeownership may seem challenging, effective financial preparedness across all other areas can make it a reality. People who set a budget, save money regularly, and maintain a strong credit score can build towards this goal.
The effort is well worth it. Current homeowners rate their home equity as extremely important for their financial stability and long-term goals.
Support for financial preparedness
Achieving financial preparedness across all areas of life can feel daunting, but you don’t have to handle it alone.
41% of respondents said that working with a financial planner or advisor was helpful for achieving financial preparedness, making it the top-ranked option for support. Respondents who didn’t have an advisor rated their bank as the top source of financial advice and support.
A TD Bank financial advisor can work with you to determine next steps for your financial plan, retirement accounts, and investments. TD Bank branches also have mortgage brokers who can guide your housing decisions, whether you are already a homeowner or looking to buy for the first time.
With the proper support, you can achieve financial preparedness and feel confident about reaching your goals, regardless of what the world throws your way.