Having a savings account is absolutely vital for your financial health. You must protect yourself and your family from financial emergencies. If your family suffers a pay cut or layoff, having money in savings will be invaluable. The same is true if you have an unexpected need for vehicle repairs, home repairs, or medical bills in the future.
What You Can Do
Start a savings fund today. Start as small as you need to, and just let your emergency fund grow over time. It may seem tedious and overwhelming to add to your savings if you’re living paycheck to paycheck, but it is possible. In fact, you can save $1000 in one year without stressing yourself out in the process!
Try these tips for painlessly growing your emergency savings fund
1. Pay yourself first. Building cash reserves is vitally important, so pay yourself first. Set a specific amount that you can save every pay period and pay that money to your savings before you do anything else. This will ensure that you are putting money away, even if that amount is small at first.
* Check to see if your bank has an automatic transfer option. Set it up to transfer your set amount of money out of your checking account and into savings automatically for you each pay period. Out of sight, out of mind. Soon you won’t miss it at all!
* Even $5 per week will add up to $260 this year if you start the week of January 1st.
2. Keep funds out of reach. Although it’s important to keep money accessible so you can reach it when you need to, you should keep your funds out of reach as best as you can to make it harder to spend the money that you wish to save.
* For example, use a bank that isn’t in your immediate area. By putting more work into the process of getting your money, you keep it out of easy reach so you don’t spend it poorly.
3. Save pocket change. Collecting and saving pocket change won’t pay for your retirement, but it does add up. It’s amazing how much money you can store when you simply collect your change at the end of the day and put it in one place. Fill a jar or large container, and then roll the coins and deposit them into the bank.
4. Take it one day at a time. Saving $1000 may be a slow proposition, but if you take it one day at a time, you can achieve your goal. Just set small goals for yourself and work to achieve them one at a time. What can you cut back on to save some money? How can you guarantee a few extra dollars to put into savings every week?
* If you put just $3 into your savings account each day with an interest rate of 1%, you’ll save almost $1100 in a single year. What small thing can you do today to save $3? Ask yourself this question each day and watch your savings grow!
* If you put just $5 into your savings account each day with an interest rate of 1%, you’ll save more than $1800 in a single year.
* Make small sacrifices to arrive at your savings goals. You don’t have to give up your favorite things; just take each day as it comes and make good choices on your spending to pocket as much extra money as you can.
Small steps toward saving money can add up significantly over time. Plus, these small steps get you into the habit of saving as a regular part of your daily routine. Start saving today and you’ll have an emergency fund in no time!