By LINDA BEECH
K-State Research and Extension

Make saving a priority to help cushion the impact of financial emergencies.

According to an annual survey conducted by Bankrate.com more than a quarter of Americans have no emergency savings. Of those who do have savings, 67 percent have less than six months worth of expenses saved. Having access to just $500-1,000 in savings could help most people meet unexpected financial challenges, said K-State Research and Extension family resource management specialist Elizabeth Kiss.

The purpose of emergency savings is to have money on hand when disaster strikes or money is tight, but those funds need to be replaced as soon as a household is able to after the emergency occurs.

Kiss said savers should try to have six months to a year’s worth of living expenses on hand to combat any unforeseen expenses.

“It’s living expenses, not income, so it’s likely less than your total income for six months,” she said. “Regardless of the amount, most of us would probably do better to try to save more.”

Car repairs, storm damage and unexpected medical bills are unanticipated expenses and reasons to have emergency savings on hand. While putting money away for the unknown may make saving difficult, having cash on hand allows for less dependence on credit cards and other sources of funding in case of emergency.

Spread out your savings, Kiss advised. Keep some cash stored in a safe, or in a secure place in your home or office. Depending on your financial situation, it might be helpful to store some funds in separate bank accounts, or have one account exclusively for your emergency fund.

Make a habit of putting money into your emergency fund each month. Decide on a dollar amount, and move it to your emergency fund account each time you receive a paycheck.

“Think about how much you can realistically save every month, and think of it as putting it aside for future uses, rather than just saving,” Kiss said. “You might also put some money aside for retirement or other long-term savings goals.

What if you don’t have $25-50 to save each month? Kiss advised to watch for “spending leaks”– small, regular purchases like morning coffees, soda and candy bars, and eating out.

“It doesn’t mean you have to go without,” she said. “Think of ways you can meet those needs, but pay less. If you like to drink pop, buy it at the store. Make coffee at home.”

Homeowners can look for ways to save on fixed expenses such as heating and cooling, Kiss said. Small changes, including setting the thermostat a few degrees higher in the summer, closing curtains and using fans can curtail those expenses.

The ultimate goal is to make saving a priority, Kiss said. Think of an emergency fund as you would any monthly utility.

“You need it, just like you need heating, cooling and water,” she said. “Put it in with your bills, and think of it that way.”

The greatest advantage to having an emergency fund is having something to fall back on.

It can be great peace of mind.

Linda K. Beech is Ellis County Extension Agent for Family and Consumer Sciences.