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Having an emergency fund is essential to becoming debt free. An emergency fund protects you from those unexpected expenses that seem to pop up from time to time. With an emergency fund, when your car breaks down, you don't have to turn to your credit cards or take out a loan to pay for the expense. This means you keep yourself out of debt.
Most people like the idea of an emergency fund, but can't find the extra money to fund one. First, you need to start with a spending plan. Track your spending each month. Save every receipt and write down every cash purchase. Review what you're spending your money on, and see if there's areas where you can cut back. Here are a few ideas to get your started.
1. Cut out the extras - These are small expenses that add up over time. The most common example is coffee. Instead of giving your money to Starbucks, make your own cup of coffee at home. Drink water with your meal, instead of cokes. Bring your lunch to work with you instead of eating fast food.
2. Buy generic - Buy the store brand of paper towels, cleaners, cereal, and any thing that will save you money. Walmart has revamped their generics to make them look, um, not generic. I love the new branding, and I love saving money.
3. Get thrifty - If you just can't stop shopping, change the places you go. Instead of going to the mall, go to thrift shops to search for deals. It's like a treasure hunt, you never know what you might find. I found my Halloween costume at Goodwill just last weekend.
4. News for free - If you're one of those people still paying for a daily paper, get with the program. You can get all the news you'd ever want online for free. Besides too much news can make you depressed.
5. Home entertainment - Instead of going out for dinner and a movie, why not save yourself $50 and stay at home. You can make dinner together, rent a movie from Redbox, and pop your own popcorn. If you're not the movie type, why not have a game night. When's the last time you played Monopoly?
6. Down-Size your services - Do you really need 800 channels, include 12 HBO's, 9 Starz, and 6 Showtimes? They show the same movies over and over again. Why not cut back to the basic package for a few months. Or do you really need all those cell phone minutes? Could you get by with a smaller plan? What about cutting out text messaging? Do without texting, that's impossible.
7. Save your change - Empty your pockets or purse each night and put away your coins in a piggy bank. At the end of the month open the piggy bank and count your winnings. You'd be surprised at how much money you've saved.
8. Have a "no spend" month - This is my favorite tip of all. Simply buy nothing, other than what you need, for a month. How much money would you save if you did that?
Keep in mind, these don't have to be permanent decisions. You're just cutting back until you've built your emergency fund. Of course once you've started saving money, it may be hard to stop.
Most people like the idea of an emergency fund, but can't find the extra money to fund one. First, you need to start with a spending plan. Track your spending each month. Save every receipt and write down every cash purchase. Review what you're spending your money on, and see if there's areas where you can cut back. Here are a few ideas to get your started.
1. Cut out the extras - These are small expenses that add up over time. The most common example is coffee. Instead of giving your money to Starbucks, make your own cup of coffee at home. Drink water with your meal, instead of cokes. Bring your lunch to work with you instead of eating fast food.
2. Buy generic - Buy the store brand of paper towels, cleaners, cereal, and any thing that will save you money. Walmart has revamped their generics to make them look, um, not generic. I love the new branding, and I love saving money.
3. Get thrifty - If you just can't stop shopping, change the places you go. Instead of going to the mall, go to thrift shops to search for deals. It's like a treasure hunt, you never know what you might find. I found my Halloween costume at Goodwill just last weekend.
4. News for free - If you're one of those people still paying for a daily paper, get with the program. You can get all the news you'd ever want online for free. Besides too much news can make you depressed.
5. Home entertainment - Instead of going out for dinner and a movie, why not save yourself $50 and stay at home. You can make dinner together, rent a movie from Redbox, and pop your own popcorn. If you're not the movie type, why not have a game night. When's the last time you played Monopoly?
6. Down-Size your services - Do you really need 800 channels, include 12 HBO's, 9 Starz, and 6 Showtimes? They show the same movies over and over again. Why not cut back to the basic package for a few months. Or do you really need all those cell phone minutes? Could you get by with a smaller plan? What about cutting out text messaging? Do without texting, that's impossible.
7. Save your change - Empty your pockets or purse each night and put away your coins in a piggy bank. At the end of the month open the piggy bank and count your winnings. You'd be surprised at how much money you've saved.
8. Have a "no spend" month - This is my favorite tip of all. Simply buy nothing, other than what you need, for a month. How much money would you save if you did that?
Keep in mind, these don't have to be permanent decisions. You're just cutting back until you've built your emergency fund. Of course once you've started saving money, it may be hard to stop.
1 comments:
Thanks for sharing such great post, according to me there are numerous reasons when we need such emergency funds. By building an emergency fund you will feel more secure because you are prepared for the facing any financial crisis. For more details on emergency fund refer Emergency Fund
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