Most Indiana Parents Have Only $3,000 In Emergency Savings

Recent reports show few Hoosiers save enough to cover six months' expenses, which is what financial experts recommend people put aside in a rainy day fund.

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Photo: 401(k) 2012 (Flickr)

Less than a quarter of Americans have enough money to cover six months worth of expenses in case of a financial emergency, according to a Bankrate survey.

For Jan and Kem Anderson, putting a lot of money into a savings account never seemed possible.

With Kem’s job as the superintendent of the Shelby County Highway Administration and Jan’s two jobs as a gymnastics coach and a teacher’s aid, the couple made enough to pay their bills, put food on the table and raise a family in Shelbyville, Ind.

Then, Kem got sick and needed a costly liver transplant surgery.

“This just wasn’t something I knew was in my life plan,” Kem Anderson says. “I don’t think it’s in anyone’s life plan to go through something like that. It just happens and you got to deal with it and let them take care of you.”

By the time the surgery was over, medical bills topped $1 million. While insurance covered most of it and friends and family organized fundraisers to help cut down the cost, but the Anderson’s were still struggling. Some bills were sent to collectors, so they started paying them off in small increments–$20 one week and $50 the next.

“We still make payments,” Kem Anderson says. “I have to take a blood test every three months, and the way my deductible is, it takes quite a while to get it paid. So about the time we get caught up, it’s time to start all over.”

Surveys Show Americans, Hoosiers Do Not Save Enough

Half of the population is in the same boat as the Anderson family was before they had all the medical expenses. Most Americans struggle to save and have less than three months expenses in a savings account.

According to a recent Bankrate survey, less than a quarter of Americans have enough in a savings account to cover six months of expenses, which is traditionally what financial consultants have recommended.

But last month BMO Harris released survey data that shows Indiana parents save well below the national average. The average savings for Indiana parents is just slightly above $3,000, while that number is almost $10,000 at the national level. Four in ten parents in Indiana, have no savings at all.

David Hays, President of Comprehensive Financial Consultants, has been in the financial consulting business for decades. He says it’s difficult for people to sort out their priorities. He says what is most important is paying down debt, saving for your kids’ college, preparing for retirement, and starting a “rainy day” fund.

“Kids have grown up in a very credit driven society, but the best time to save for that new set of tires is when you just put the last set of tires on your car,” Hays says. “That’s a mentality that the Children of the Depression have, but that didn’t relay over to the baby boomers, certainly not to the echo boomers, but we’re starting to see that the younger generations see that their parents are being more conservative in how they behave financially.”

While the interest to save has increased, many Indiana residents are still having trouble.

“[We need to ] increase employment opportunities so people aren’t living strictly on assistance,” says Ryan Stacy, a grant librarian at the Monroe County Library.

One part of his job is developing finance education programs for 20- to 30-year-olds. Stacy says while the interest increases, there are still barriers that stand in the way of many Indiana residents. One is – just not having anything left to save after the bills are paid.

Indiana’s unemployment rate has been improving gradually. It’s currently at 5.7 percent.

“You have to have money to be able to manage your money,” Stacy says.

Reflecting on the last few years, the Anderson’s advice to other people who might find themselves in a similar situation is simple: try to put some money into a rainy day fund, but also don’t forget to have a little fun along the way.

“Save as much as you possibly can and even though you’re trying to save, don’t forget about family time,” Jan says. “It’s not all about work. Take time out for your family. Kick back and enjoy yourself.”

Sara Wittmeyer

Sara Wittmeyer is the News Bureau Chief for WFIU and WTIU. Sara has more than a decade of experience as a news reporter and previously served with KBIA at the University of Missouri, WNKU at Northern Kentucky University in Highland Heights, KY, and at WCPO News in Cincinnati.

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