Keep Calm and Save Money
We’ve all heard the saying “A penny saved is a penny earned” — but sometimes it’s almost impossible to think about savings when most of your earnings are already accounted for. If bills, rent, student loan debt, credit cards, and the like are exhausting all of your current income, putting any amount into savings may be the last thing on your mind.
But, what happens when your car suddenly needs an emergency repair? Or your beloved pet gets sick and has to be rushed to the ER? Or what if your comfortable salary gets cut in half? These are the unfortunate moments when any amount in savings (small as it may be) will help to prevent you from going even further into debt.
Regardless of any other debt, it is important to start building a buffer of savings, ideally enough to cover several months of living expenses. Start small, even a few dollars can build up over time.
• Just Get Started. It’s important to do your due diligence first. This means setting a budget that includes paying yourself. Determine how much you can realistic set aside from every paycheck. Whether it’s $2 or $200, it needs to be an amount that you can stick to. It helps to automate this process too! If your savings is removed before you even see your paycheck, it will eliminate the temptation to spend.
• Under the Mattress is Not a Good Place to Save! If you are making the effort to create a budget and set aside some cash, you want your money to work for you as best as possible. Instead of a low-interest savings account, save your cash in an account that earns at least 1% in interest. Keep an eye on monthly maintenance fees and FDIC insurance. It’s also a good idea to keep this savings account in a bank that is separate from your checking account. This will prevent constant visibility and further temptation.
• Be Sure with Insurance. Once your savings process is under control, it’s a good idea to review the rest of your expenses. Your emergency fund can only go so far. Various insurance policies — auto insurance, homeowners insurance, renters insurance, etc. — can help protect you and your family without draining the bank.