Health & Fitness
Saving for a Rainy Day?
Already stretched to the limit, it's difficult - but not impossible - to save.
During difficult financial times, it can be especially hard to save any money. Unfortunately, the paradox is that you need to save even more during times like these.
Experts have long held that you should have 3 to 6 months worth of normal expenses saved in an emergency fund. The reality is that 9 to 12 months may be the "new" 3 to 6 months. If you lose your job, another one may be harder to find right now. According to Scary Unemployment, the average duration of unemployment is up to about 40 weeks now.
How can you save when things are already so tight?
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Start small. Begin by trying to put away a few dollars out of each paycheck before you do anything else with your money. The old adage to "pay yourself first" is still a good one. Set up an automatic transfer or payroll deduction into your savings. Even if it's only $10 per pay, it will eventually build up.
Reward yourself for saving a buck. Every time you resist spending money on something unnecessary, reward yourself by transferring the saved money into your savings account. For example, if you were tempted to stop by a fast food place for dinner but go home instead, transfer the $5 or $10 that you saved by going home into your account.
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Bank your windfalls. If you get some extra cash for your birthday, overtime pay or a bonus at work, put it straight into your savings. While it might be nice to splurge on yourself, nothing can beat a secure future!
Segregate your emergency savings. Put your emergency savings in account that isn't tied to your checking or regular savings account. Make it a little more difficult to access unless you really need it. At Destinations, my credit union, we have "Auxiliary" accounts that you can name whatever you want. I keep one just for emergencies and don't allow my checking to overdraft the account.
If you're not sure how much you need in an emergency fund, this calculator will help you figure out what you need for 3 months.
Do you have any tips to share on how to save? I'd love to hear them!!!