Resolve to save: An emergency fund (the easy way!)
So many New Year’s resolutions are far too easy to break. After a few weeks of good behavior the siren song of that cupcake/cigarette/shoe sale tends to drown out your inner “best intentions” melody.
And financial resolutions? Soooo many ways to fall off that particular wagon. Your winter boots start to leak. Your kid breaks her glasses. Your car makes a scary noise. How can you ever get ahead when life is so damn daily?
Here’s how: By resolving to save a basic emergency fund. Even just a $500 untouchable-until-needed cushion can mean the difference between paying in full and breaking the bank.
But how do you get half a thousand simoleons together, especially when you feel you’re just about keeping up with the bills?
Try this two-step plan:
1. Set up an automatic withdrawal from each paycheck (even if it’s only $5)
2. Get creative about teasing that amount from among existing resources.
The following tips are simple and often painless ways to create a buffer between you and the next “uh-oh” moment. Start with the tactic that seems easiest; once that frugal hack feels like second nature, add another. (They say it takes 21 days to make a habit, so give yourself three weeks between each new technique.)
1. Spare change challenge. Every night put all your pocket change in a jar. Deposit the money at the end of the month. Even if it adds up to only nine or ten bucks at a time, in a year’s time you’ll have as much as $120 that might otherwise have landed in the Coke machine.
2. Coupon savings. Check the bottom of your grocery receipt for “You saved $4.35!” Transfer that amount to your emergency fund as soon as you get home. Note: The Favado app combines coupons with the best sale prices, which means your savings will add up a lot faster.
3. Coupon savings, Part 2. Desperate for a little fun, or wanting to treat a loved one for a special occasion? The blue Valpak envelope is your friend. That buy-one-get-one coupon might mean the difference between going out for your anniversary or staying at home. A mani-pedi is an impressively grown-up gift for a 12-year-old niece. And admit it: that discounted massage would go a long way toward helping you deal with tax-time stresses.
4. Bank “extra” money. If you receive a manufacturer’s rebate, a surprise $20 in a birthday card or a work bonus (lucky!), stash it in your emergency fund. You weren’t expecting it, so you can’t miss it. Can’t afford to bank the whole bonus? Try to put away even 10% of it.
5. Forget your raise! If you were lucky enough to get one, pretend that you didn’t. Then automate the weekly amount into savings. Even just a 2% increase will add up.
6. Create a curse jar. Or a smoking jar, or a “spent too much time on Facebook” jar. In time you’ll mend your ways, and until then your emergency fund gets a bit beefier.
7. Create an “I rock!” jar, too. Pay yourself a quarter every time you take a walk during lunch or keep your Facebook habit within a predetermined limit.
8. Rob yourself. The day before payday, see what’s left in checking. If it’s $37, move $7 (or $17) over into the emergency fund.
9. Try “impulse saving.” Tempted to pick up Thai food on the way home? Heat up leftovers or scramble an egg instead, and transfer the amount you would have spent into the fund.
10. “Launder” some cash. Put a dollar into a jar every time you do a load of wash. Can’t afford that? Then do it for every other load. Any coins you find in pants pockets should go into the same jar.
11. Do without now and then. That doesn’t mean “welcome to the no-life-at-all zone,” but rather a reordering of your priorities. Suppose you take your kids to the movies every Saturday. Tickets plus popcorn probably run you upwards of $40. Change that habit to movies twice a month and find something else to do on the other Saturdays. With a little imagination (and maybe a glance at Pinterest) you can find cheap or free fun in the community or doing a project at home.
12. Don’t pay (retail) for soda. If you can’t stop hitting the soft drink machine each afternoon, buy 12-packs on sale and bring a can to work every day. Figure out the difference between the soda machine price and the discounted kind, multiply that by five and automate that amount each week. You’ll be surprised, and maybe depressed, when you figure out how much you’ve been spending.
13. Get yourself a buddy. Find a friend or relative who’s interested in saving, too. Now you can share your successes (“$11 in the spare-change challenge last week! Woo hoo!”) or your aggravations (“If only the dog hadn’t gotten into the trash and eaten that corncob…”) in a weekly phone or e-mail chat.
14. Pay it forward. After months on the installment plan, Fido’s emergency corncob-removal surgery is finally paid off. Woot! Now: Make two more “payments” into your emergency fund. You’ve managed this long, so what’s another two months?
15. Don’t loan money to Uncle Sam. Stop me if this sounds familiar: You almost always get a tax refund and you use far too much of it on non-essentials. Divide last year’s refund by 52 and talk to payroll about reducing your weekly paycheck by that amount, then automate that into savings. However: This will not work unless you are disciplined enough to leave that money where it is.