Motivating yourself to save money for unexpected
events such as a job loss or a major medical bill is difficult.
It is more fun and somehow easier to stash away money for an immediate
goal such as a new stereo system, summer vacation or the latest
But building and maintaining a savings cushion
is vital for your financial health. Most financial experts recommend
having a minimum of three months' worth of living expenses set aside
in case of an emergency.
If you find it challenging to steal away some
cash from your budget to put into a savings account, here are a
few ideas. Print out this list of 15 ways to build a healthy savings
cushion. Tape it to your refrigerator as a daily reminder that saving
is a priority.
- Focus your spending.
Create a budget and track your spending. After seeing where your
money goes, it's much easier to decide where you can cut. Then
live by it.
- Treat saving like a bill.
Consider your monthly savings amount as a bill that has to be
paid. Consider having the amount transferred automatically from
your checking account or paycheck. Pay your account every month
or every two weeks.
- Think small.
Many people don't think their budget allows room to save, but
even a small amount adds up over time. Depending on the size of
your family, skipping a meal out each week could result in a $160
per month savings deposit. That's $1,920 a year after taxes! Take
a good look at your spending habits, and you probably can find
$150 or so each month in extras that you could do without to build
- Save your raise. The next time
you get a raise at work or a tax refund, consider directing half
to savings. If you're not used to the money, you won't miss it.
- Continue paying. When you pay
off a car or other loan, consider making half of the payment to
yourself and put it into your emergency savings account. You will
not miss the money if it is put into savings, but you will find
a way to spend it if it remains in your checking account.
- Turn off the TV.
Don't listen to the advertisements, ''Zero-percent interest. Buy
this now!' Ignore sale flyers or mail-order catalogs. The latest
sale tempts you to spend money unnecessarily.
- Think before you charge. Unless
you're in the habit of paying your credit card bill in full each
month, don't use the cards for anything you can eat or wear.
- Consider a refinance. Interest
rates are exceptionally low. Consider refinancing your mortgage
and your car loan.
- Alternate your commute.
If you live in an area that has good public transportation, see
if you can get around without the car. Maybe you can get by on
one car instead of two.
- Conserve energy. Do an energy
check on the house. Replace cracked storm windows and renew the
- Read not, waste not.
Don't renew subscriptions to magazines or newspapers you're not
- Java-jolt savings. If you stop
at Starbucks or another coffee shop each morning, make coffee
- Participate in a 401(k) or 403(b) plan.
If your employer doesn't offer these plans, then you could start
saving in a tax-advantaged IRA or Roth IRA account.
- Involve the whole family. Even
the youngest child can contribute change to the savings goal.
It is easier for children to get involved if they understand why
they must give up pizza night (or at least cut down the number
of toppings!). Also, you are setting a good financial example
for your children.
- Plan a treat for you, your family or
both when you reach your emergency savings goal. Make
it something everyone will look forward to, but not something
very expensive, like a day at the zoo or at the beach. The important
thing is to mark the occasion and congratulate yourself and all
those who helped!
-- Laura Bruce, Steve Bucci,
Don Taylor and Dani M. Arthur contributed to this story.