For years, Josh Haus and his wife, Kate, have faithfully set aside part of their paychecks each month in a savings account meant for emergencies and retirement. But when a friend, a single mother, died unexpectedly and left behind two teenagers, the parents of three adopted them, and suddenly spare cash for life’s unexpected events became scarce.

So when Haus’s co-op announced a new employee-match program that encourages workers to build a rainy-day fund, he signed up right away.

“We’ve always been diligent about saving, but we don’t want to worry about tapping into our own personal savings,” says Haus, 35, a lead journeyman lineman at Lake Region Electric Cooperative (LREC) in Pelican Rapids, Minnesota. “It’s a nice way to hide away a little bit of money.”

Concerned by recent research showing that most Americans would be unable to come up with money for emergencies, employers like LREC and even large corporations are creating special contingency fund programs. The goal is to help workers meet unexpected expenses without raiding their 401(k) retirement funds or racking up credit card debt.

“So many people think, ‘I’ve got to get to retirement’ but not about how they can better prepare for life’s turns and unexpected events,” says Brian Allen, a representative with Homestead Funds, a registered investment company founded by NRECA. “And it’s not just the negative things that can happen in life but also the good things that you want to start preparing for. That’s equally important, and some people just don’t have that. They need that gentle push on the swing to get started.”

At LREC, that “push on the swing” is a program in which the cooperative matches employee investments up to a defined amount. Within the first three months, 47 of 73 employees had signed up.

“Workers say the employee match encourages them to save on their own,” LREC CEO Tim Thompson says. “I wish I had this at a young age when I was starting out.”

Regardless of income

Financial experts say a solid emergency fund should have enough cash to cover three to six months of living expenses.

“If you have $2,000 a month in expenses, you should have at least $6,000 to $12,000 put away,” Allen says.

But when several 2019 studies showed many Americans don’t have enough cash on hand to cover even minor emergencies, employers got concerned.

“Relatively small, unexpected expenses, such as a car repair or replacing a broken appliance, can be a hardship for many families,” says the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2018.

And those savings shortfalls exist in households regardless of income. A late-2019 report from JPMorgan Chase found that two-thirds of families lack a sufficient cash buffer.

Allen, who spends about 60% of his time meeting with co-op employees and leadership, has seen that the subject makes people uncomfortable, but he says it needs to be discussed.

“I talk to employees about what if you get hurt on the job and you have to take short-term or long-term disability, and you’re not getting your full pay?” he says. “Your mortgage doesn’t care.”

Building a nest egg

During a visit last year to LREC, Allen talked about the savings crisis and floated the idea of an employer-sponsored emergency fund. The idea intrigued Thompson.

“As a CEO, I latched onto that,” he says. “If someone is having a hard time creating a nest egg, I want to help them.”

Under the LREC plan, participating employees set up a Homestead Funds account and invest an amount they are comfortable with each payroll cycle. The cooperative matches the amount up to $50 on a quarterly basis.

“You get $50 in there when you’re in your 20s and let that work for you over your career, it could add up,” Thompson says.

The co-op also made the strategic decision to tie supplemental quarterly contributions to co-op performance on four goals: safety, reliability, member satisfaction, and financial strength. If all four goals are met, the co-op contributes $50 to each participant’s account.

LREC is the first co-op to open an employer-sponsored savings program with Homestead Funds, Allen says, adding that other co-ops have expressed interest.

“I do think some co-ops, just like a lot of employers across the country, are concerned that employees are turning to methods not beneficial to their financial health: credit cards, loans, or borrowing heavily from their retirement funds,” he says.

The business interest

University of Pittsburgh researcher Carrie Leana studies the connection between employees’ financial stress and their on-the-job performance. In a recent study of short-haul truckers, she found that higher levels of financial worry were associated with an increased likelihood of preventable accidents.

“Our findings suggest that companies have a significant stake in the financial well-being of their workforce and are well served by instituting practices that reduce employee financial precarity,” Leana writes on the university’s website.

Thompson says LREC’s story is similar.

“To the extent possible, we want to create an opportunity [where] our folks aren’t distracted by financial concerns,” he said.

For Haus and his wife, raising two additional kids is fulfilling but requires a bit more financial planning.

Haus says their longtime disciplined saving has enabled them to cover the essentials, and the new co-op program helps give them a financial cushion for things like family vacations or other unexpected expenses.

“It’s great that the co-op cares about me and my future.”

Investing in mutual funds involves risk, including the possible loss of principal.

Investors should carefully consider fund objectives, risks, charges, and expenses before investing. The prospectus contains this and other information about the funds and should be read carefully before investing. To obtain a prospectus, call 800-258-3030 or visit

Homestead Funds’ investment advisor and/or administrator, RE Advisers Corporation, and distributor, RE Investment Corporation, are indirect, wholly-owned subsidiaries of NRECA 03/20.