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 three to six months 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,” she said. “Regardless of the amount, most of us would probably do better to save more.”

Car repairs, home maintenance, storm damage repair, and unexpected medical bills are common 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.

The first step in saving for emergencies is to keep a small amount of cash or traveler’s checks in a secure location at home.

“If the power is out in your community, the ATMs may not work,” Kiss said.  “If you don’t have cash, you might not be able to buy things you need, because stores may not be taking cards. You want to have a bit of cash somewhere safe.”
Next, set up an account for your emergency savings.

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 money aside for future uses, rather than just saving for the sake of saving,” Kiss said. “You might also transfer some money for retirement or other long-term goals that you have, and then you know what you have left to pay monthly bills.”

What if you don’t have $25-50 to save each month? Kiss advised to watch for “spending leaks”– small, regular purchases like morning lattes, soda, candy bars, eating out and trips to the vending machine– and save some of that money instead.

“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 or lower in the winter can curtail those expenses, leaving more for saving.

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 as a regular expenditure.”

The greatest advantage to having an emergency fund is having something to fall back on when the need arises. It provides great peace of mind.

If you need motivation to start saving, or to save more, call me to schedule my group  presentation on “Saving Dollars When You Don’t Have a Dime to Spare” for your club or group meeting.  Individuals should  check out the resources at www.americasaves.org where you can find helpful saving resources and sign up to receive saving messages by email or text.

For more information, call the Ellis County Extension Office at (785) 628-9430.

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