Give Yourself A Little Emergency Cushion
Even if you can’t afford a huge emergency fund, that’s no excuse for not trying to have something to cushion you in case of an emergency. Here are some ideas for how to set a little aside.
You read and hear a lot about the importance of keeping an emergency fund just in case you need it. Many will advocate having three to six months of expenses set aside “just in case”. If you can afford to set that much aside, by all means do it! But if you can’t afford to build up that much, don’t give up on the idea of an emergency fund altogether. You should still try to save what you can in order to avoid living paycheck to paycheck.
I came across an article that talks about trying to come up with a $500 fund to have in case of emergency. Start by getting to the point where you know you’ll have at least $100 left in your checking account at the end of the month. One easy way to get there is by going a month or two without eating lunch out or buying yourself any new clothes or treats. You’ll be surprised at how quickly just cutting those things out will allow you to start your emergency fund.
Another simple way to accumulate a little cushion is to set up an automatic transfer from your checking account to a savings account. Maybe make it $25 a paycheck. Again, you’ll be building your emergency fund before you know it, and if it’s automatic you’ll be forced to live within the lesser budget. Also, think about trimming the extras on your phone bill or cable bill, or cut back from high speed to regular internet for awhile. All these things may seem small taken by themselves, but do them all for a few months and your emergency fund will start to build.
And, finally, once you have your emergency fund, make sure you use it only for what it’s for—emergencies. As the link below points out, the furnace dying is an emergency, your second TV dying is not. Don’t dip into your emergency fund once you have it unless you have to. If you do dip into it, make sure to "pay" yourself back so that cushion remains.You’ll be glad you have it when you need it.
http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/WhyYouNeed500InTheBank.aspx
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DBretzI have close to 10 years of experience in the financial services industry and love being able to assist people in coming up with solutions for their financial issues. I am happily married, and my wife and I love living in the community we work in. I look forward to sharing with everyone on the site.
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Comments
On 03/15 at 09:54 AM,
Gale W. said:
I use the save spare change approach. At the end of each day, I have at least 4 to 6 dollars in change at the bottom of my purse and in my pocket. I simply take it out and put it in the drawer. Once I was able to save $200. Now, I save one dollar a day, no matter what! So when I need gas or groceries and its not a pay week I can go there.