moderate - income families with lower savings. in addition, recent research found that households that are “ liquid - asset poor ” are two to three times more likely than those with liquid assets to experience “ material hardship ” after a job loss, health emergency, death in the family, or other adverse event. 11 clearly, emergency savings are important for households at every income level. for some, a tax refund or tax credit is a possible source of emergency funds. the federal reserve bank of st. louis has a user - friendly publication titled, you ’ ve earned it! what the earned income tax credit can do for you. 12 this booklet explains how the earned income tax credit ( eitc ) works and who qualifies for the credit. millions of low - income, working americans are unaware that they are eligible for thousands of dollars in tax credits. receiving a windfall such as the eitc is the perfect opportunity to establish savings that would be available for unexpected expenses. and thanks to the irs form 8888, which has been around just a couple of years now, you can send your eitc refund directly and automatically to up to three different accounts. manage your debt my final suggestion is to manage your debt. loans are an excellent way to use future income to pay for an important purchase today, such as a car, an education, or a home. but before taking out a loan – a student loan, for example – you should ask yourself three questions. first, does the value of the purchase justify the payments you will have to make? education is one of the best investments you can make, but think about whether the extra earnings from a particular course of study will enable you to earn enough to make loan payments in the future. furthermore, when preparing to manage student debt, consider the full breadth of expenses – room and board, books and supplies, etc. – that you will incur to determine the total amount you will need to borrow. according to the american council on education, half of all graduates in 2004 used credit cards for school expenses. 13 you want to avoid having to do that. the second question is closely related : will you be able to make the payments on the loan even if everything doesn ’ t go as you plan or if payments are higher in the future? consider the highest payment you will potentially face rather than just the initial payment. and finally, ask yourself if you have found the best loan for you. ask lenders questions,

financial education is appropriate for a variety of age groups, offers guidance for consumers making key financial decisions at different stages of life, and includes a compendium of financial education resources that address these needs. 5 saving is important as you develop a financial plan, i offer my second recommendation : saving is important, and you ’ re going to need to increase your savings to manage your financial lives successfully. american families rely on savings and investments to achieve a secure retirement, save for their children ’ s education, buy homes, start businesses, manage financial emergencies, and pass on wealth and opportunities to the next generation. this not only makes financial sense, but there ’ s a growing body of evidence that families with savings and assets generally do better in life than those without in terms of social, behavioral, educational, and economic outcomes. i am aware that during tough economic times, saving is a challenge for people at all stages of life. starting salaries for recent college graduates have declined, which means that young americans who are employed have fewer resources for saving and investing than previous generations. on the other end of the spectrum, many older workers are delaying retirement because they have insufficient assets to fund their retirement. even more troubling is research showing that many consumers who should be saving for retirement have been forced to take hardship withdrawals from their 401 ( k ) plans. according to an analysis by vanguard, hardship withdrawals increased by 49 percent between 2005 and 2010. 6 the increasing use of retirement savings for other purposes is particularly problematic now that employers have increasingly shifted the responsibility for saving for retirement toward individual employees. having a secure retirement is a high priority and a significant long - term goal for many americans, so it is especially important that they have an understanding of the level of resources they will need in retirement and the investment options available to them. despite these recent trends, most people have the ability to save if they plan accordingly. one way to establish and maintain regular savings is through automation. think about your own 401 ( k ). at one point, perhaps when you were hired, you made one decision to save, and the rest was done for you – automatic payroll deductions, investments, statements, etc. automatic payroll deductions can also be established to build general savings, savings for college, and other critical pre - retirement assets. experiments with automatic savings programs like “ auto401 ( k ) s ”, the “ save more tomorrow ” concept, and “ autosave ” have generated encouraging results