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Having and saving money is not always easy.  It is said that we should at least have three to six months of living expenses saved. To do so, we must learn how to cut back on spending on unnecessary things.  We also have to pay ourselves first.  One way to do this is to set up automatic deposits to pay yourself first; moving money from your checking account into your savings account or use direct deposit to allocate a portion of your paycheck.  The amount will depend upon your monthly expenses.  If you can spend twenty dollars on dining out each day or every week, instead use that money to build up your savings.

 

Another way to save for an emergency is to save your extra money; like raises, bonuses, your income tax refund, or stimulus check.   Also, consider paying down any debt that you have that does not have to remain a monthly bill.  Don’t use all of your money for that purpose, just put at least $100 towards your savings, if you can afford to.  Think about extra bills that you have each month like: streaming services, cable, internet, cell phone, magazine and other types of subscriptions and figure out how you can cut back on those expenses, either by eliminating them or selecting cheaper rate plans.

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Another way to save for an emergency fund is to never spend an amount of money that exceeds your income.  Basically, do not overspend.  Sit down and create a budget plan.  Determine how much money you earn each month after taxes and deduct your monthly bill expenses from that total amount of your take home pay to determine how much money you will have after all of your expenses are paid.
 

You can also look for ways to generate more revenue.  If you are creative, DIY (Do-It-Yourself) projects that you do well can help generate revenue.  You can also look around your house to determine what items you can get rid of and sell them at a garage sale and use the extra money to put into your emergency fund account.  Your emergency fund account should be a savings account, separate from your checking account. When unexpected expenses arise like home or car repairs, you can use your emergency fund money as needed.

 

This pandemic has taught us that all of us can benefit from an emergency fund account.  Don’t always be the first person to buy the latest trends and gadgets.  If you must have the latest trends, wait awhile to purchase those items, because they usually go on sale.  Figure out ways that you can save money.  It is better to invest money into something that can generate more money for you, instead of spending it on something that produces no return on investment.  If you cannot afford that new car, buy a certified used car from a reputable dealership and still negotiate on pricing.  If you have not-so-good credit, work on repairing it, so that you can get good interest rates on things like mortgages, cars, loans, credit cards, etc.  However, cash is always best.

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A good way to begin to have the freedom to save money is to first Prioritize paying off debt.  Pay off smaller debt first, then use the money that you will have after that debt is paid to apply it towards paying off your next debt, if you owe multiple sources.  Then, use that money as well to continue to pay off the next debt and repeat this each month until all of your debt is paid off.  If you have a credit card debt that is $1,200 and you cannot afford to pay the full balance, try to calculate whether or not you can pay it off within a six month time frame, or less if your income is sufficient enough to do so.  Divide $1,200 by 6, which is $200 per month.  To simplify it, you can save $100 from each bi-weekly paycheck to be able to pay the $200 a month.  If you need to spread the payments out to one year (12 months) then, divide $1,200 by 12 months, which is $100 each month.  To simplify it, you can save $50 bi-weekly to be able to pay the $100 each month.  When you have reached your goal of paying off the debt, keep saving that same amount each month to apply towards paying off your next debt and repeat whatever debt repayment plan works best for you until you are debt free. 

 

Currently, the interest rates are low, so take advantage of the rates right now.   For people with fair to excellent credit, you may want to consider refinancing loans to get a lower rate and if your loan term are for 30 years, try to change it to 15 years, if this helps you pay off your debt faster at an affordable rate.  You might also want to consider debt consolidation, i.e., getting a single loan to pay off multiple debt with one payment plan.  When getting loans, make sure you always look for Fixed rate loans that will not change for the term of your loan and make sure you can realistically afford the monthly payments.  Consider these suggestions and start saving for an emergency.  Remember, even coins add up to dollars, so if it is easier for you save your coins, save them because it just makes sense.

 

To learn more about how to save for an emergency fund watch the YouTube Video below:

 

 

 

 

 

 

 

 

 

 

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By Jason Torrents

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