Most people would agree that there’s a great deal of wisdom in having an emergency fund. Having a little more than you need tucked away in a bank account can help you to avoid overdraft fees, avoid having to obtain costly payday loans, and take care of minor unforeseen expenses as they arise. While it’s not realistic for most people to establish a buffer overnight, there are definitely some ways to slowly but surely build a small emergency fund for yourself.
Save Your Tax Refund: Most people who don’t have anything set aside in savings are probably in a position where they receive a tax refund every year. That time of year is fast approaching and over the next couple of months, you may receive a check in the form of a tax refund. The temptation is to spend the money on things you normally wouldn’t be able to buy but a better idea is to use this money, or a portion of it, as the foundation of a savings buffer. It may not be a lot of money, but the hardest part of saving for most people is getting started. Challenge yourself to save at least half of your tax refund this year and to be productive with the rest.
Pack a Lunch: One of the biggest expenses for many people is the cost of buying lunch each day. Try picking two or three days a week that you can pack a lunch and put the money you would have spent at a restaurant aside. After a month of this, you’ll not only have close to $100 to put away, you’re also likely to be healthier and develop better eating habits. When you do eat at restaurants, give yourself a strict price limit and don’t exceed it.
Sell Things You Don’t Need: The Internet makes it easier than ever to sell things that you don’t need but that have value to other people. Many sites bring buyers and sellers together without charging a seller anything at all and selling items can lead to cash inflows that can be saved. You’ll also get rid of some of the clutter around your house that’s just collecting dust. An old fashioned garage sale can also be a great way to obtain cash that could be saved.
Save Your Change: Those pennies, nickels, dimes, and quarters that many people consider a nuisance can add up quickly and they’re easy to collect. Get yourself a container and see how quickly you can fill it up and then have the discipline to save the money when you cash it in.
Save Automatically: If you have the ability to set up a direct deposit from your paycheck to your bank, ask your payroll department to route 5% of each paycheck to a savings account instead of your checking account. Again, the saving will be in small increments that you don’t really notice, but it can add up to something meaningful over time.
Whatever savings method or combination of savings methods that you use can make a big difference, but your savings will only be as reliable as you are in keeping yourself from spending it. There’s no trick to doing this; it’s simply a matter of making a commitment to yourself that you won’t touch the money in your savings account unless you don’t have any other options. The peace of mind that comes with having a buffer in savings is worth any sacrifices you might have to make in building your emergency fund.
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