7 Steps to an Emergency Savings Fund

Feb

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Don’t put off getting started. Even if you pack a peanut butter and jelly sandwich once a week and save the $10 you would have spent on lunch that day, you will be saving $40 a month or $480 a year. (That should cover a trip to the dentist.)
Unexpected expenses can be taken care of with an emergency savings fund.

Trim nonessentials from your budget. Stop paying for premium cable, daily mocha lattes and brand name food and clothing and you could save as much as $1,600 in one year.

Consider getting a part-time job. Even if it is three to four hours a week at night or on the weekend, the extra income could go a long way to creating that cushion you need.

Give the $5 bill saving plan a try. For those folks who use cash regularly, this plan involves keeping any $5 bills that you receive throughout the day and week and placing them into savings rather than spending them. A conservative estimate of savings using this plan would be $20 a week or more than $1,000 a year.

Save half of all ‘extra’ money. When you receive a raise in pay, place half of your new earnings into savings.Have the money deducted automatically from your payroll and placed into your savings account, and you will never miss it. Likewise, save half of any tax refunds or an inheritance.

Continue to make your car or other loan payment after you have paid off the balance due.Put the money into savings each month just as if you are continuing to pay the note. It takes discipline to accomplish this, but I assure you, if you don’t put the money in savings, it will get spent. To convince yourself to stick to your savings plan, think how nice it will be when the car needs service and you have the funds to pay for it with no additional interest charges tacked on to the total.
After the work is done, reward yourself!

Include saving for something fun once you reach your goal. After you reach your emergency savings goal of three to six months of living expenses, you will have developed the habit of saving. Continue to save, only this time for something fun. The dream vacation to Disneyland you never could afford, a European vacation … you get the idea.