Saving shouldn’t be a tradeoff.
I am determined now more than ever to pay off my debts and start my emergency fund.
I had my two cars break down on my fixed budget. I had no idea where or when I could get the money to repair them.
My bank accounts were at a total loss for words. And an emergency fund is the only solution I came to after nearly a month’s researching.
I concluded an emergency fund is
a reserve of funds only used for unforeseen expenses that were not originally budgeted. It is estimated as at least one month’s income.
Of course, it should be more. But this is my beginner’s base.
Start with automatic saving
I had to sit down with the misses and determined what our monthly income and expenses cost us. Once I got the figures, I decided to place $50 each pay period aside.
It’s not much, but something is better than nothing. Capital One has been a life saver. They allowed me to open two separate accounts.
FOR FREE to boot!
One for my emergency fund and another for Anastasia (my daughter). I started an automatic transfer from my main bank account with Huntington Bank into my Capital One accounts.
Automatic withdraws are the way to go. Set up the amount you want to save and forget about it. So easy with the Capital One mobile app.
I started to budget with the transfer in mind. Before I knew it, I racked up a few hundred dollars.
Jump start with the 50/20/30 rule
Mint.com detailed a simple, effective plan for anyone to start saving. The post is geared toward millennials, but I think they touched the wallets of others too.
I couldn’t have said it better myself:
They broke down our savings plan into 3 categories: essentials, savings and personal. In that order.
I gathered what my household income was, and I dedicated 50 percent on essentials like transportation seeand housing. This means gas, rent, electric bills and other bills I would have regardless of lifestyle.
Next, I took 20 percent of my income for savings needs. Well, almost. I decided on a set amount as stated earlier rather than a percentage just until I get the savings rolling.
And the last 30 percent is for your personal needs, like the movie you wanted to see or the takeout I ordered last night.
The key is to not confuse the categories. You and I both know your cable bill should not be in the essentials category.
Slashing unnecessary expenses
Speaking of cable, my bill is absolutely ridiculous. There are way too many streaming options (Roku, Amazon Firebox, Amazon Firestick, etc.) to continue to pay some outrageous price for stations I don’t watch.
This expense was an easy one to spot. But some others might not be as apparent. Pay close attention to your expenses and where you can cut because they will gnaw at your saving efforts.
With the 50/20/30 rule, savings is already integrated into the strategy. I’m using my savings to slowing pay off debt and using a portion of my personal budget to do the same.
Whatever works for you.
Start your emergency fund now before you are consumed with debt.