K-State Research and Extension News
March 04, 2011
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Make Saving for Emergency Fund a Priority

MANHATTAN, Kan. -- Most people know they should save, yet can easily identify reasons -- or excuses -- for not saving.  

“Money’s tight, yet concerns about employment and job security amidst rising prices make saving a priority,” said Carol Young, Kansas State University Research and Extension financial management specialist.

“Pay yourself first to save regularly and build a more secure financial future,” Young said. For many, saving regularly also can provide emotional security, reduce stress and make it easier to sleep at night.  

“Be consistent, even if only able to put away $5 or $10 a week,” said Young, who urges building an emergency fund first.

An injury, illness, accident, or failure of a home appliance, heating or cooling system will typically generate unexpected expenses, she said. Having emergency funds available can be helpful in decision-making when considering payment options.

Without emergency funds, those who are experiencing the emergency often must borrow without time to shop around for the lowest possible loan interest rate.

Opting instead to charge emergency expenses to a credit card can add to financial woes. If not paid in full within the billing cycle, such charges can carry a high interest rate and additional fees, said Young, who explained that a lack of savings (emergency fund) can make it difficult to pay the balance in full.  

She recommends having at least the equivalent of one or more months’ living expenses in an accessible, secure, interest-bearing account. Having as little as $250 to $500 may be enough to eliminate the need to incur additional debt, the financial management specialist said.

“To make saving a personal priority,” Young encourages employees to check with their workplace human resources department to see if earnings can be directly deposited into checking and savings accounts. If the paycheck can only be deposited in a checking account, set up an automatic electronic bank transfer on payday from checking to the savings account as a commitment to ‘pay yourself first.’

Using automatic savings can create consistent savings success, she said. When saving is automatic, there's less temptation to spend -- or convince yourself that it needs to go elsewhere.

Spending less than you earn to free up money for savings may require lifestyle changes, such as eating out less often or using fewer services.

Identifying specific, important goals, such as an emergency fund, down payment on a house or more dependable car, retirement, family vacation, or paying off debt, can encourage saving, Young said. Post savings goals in a prominent place as a reminder to save, rather than spend.

When a savings goal is specific, a saver may be reluctant to withdraw savings for other purposes.   

“Postponing saving – or the failure to save -- can leave you empty-handed,” said Young, who noted that “consistent savings are the foundation for future financial security.”

More information on managing money and Kansas Saves, a state campaign inspired by the Consumer Federation of America’s America Saves Program, is available at local K-State Research and Extension offices and online at Financial Management.


K-State Research and Extension is a short name for the Kansas State University Agricultural Experiment Station and Cooperative Extension Service, a program designed to generate and distribute useful knowledge for the well-being of Kansans. Supported by county, state, federal and private funds, the program has county Extension offices, experiment fields, area Extension offices and regional research centers statewide. Its headquarters is on the K-State campus, Manhattan.

Story by: Nancy Peterson
K-State Research & Extension News

Carol Young is at cyoung@ksu.edu