It’s not as exciting as saving for a vacation or a new car, but having an emergency fund is an important insurance policy against life’s inevitable ups and downs. While it might seem daunting and will no doubt take some time, building up an emergency fund is easier than you might think.
Consider these 6 tips for painlessly stashing cash for a rainy day.
1. Automate frequently
Sometimes saving a certain amount once a month seems daunting, and when you try to stash that amount of cash at the end of the month, you may fall short. Rather than overwhelming yourself with a substantial monthly commitment, break the amount you want to put aside into small, manageable chunks throughout the month and have them automatically withdrawn. Chances are you’ll barely miss $20 twice a week, but it still adds up to $160 at the end of the month and $1,920 in a year.
2. Roll spare change
You’d be surprised at how much money you have at the bottom of your purse or on your dresser. Every time you make a cash purchase that results in change, drop it into a piggy bank or glass jar. Once a month, roll the coins and take the stash to the bank, where you can deposit it in your emergency fund.
3. Generate extra income
Add more quickly to your emergency savings fund by finding ways to bring in extra cash. While you don’t have to take on a second job, there are ways to drum up a little extra money. Make the prospect fun by looking to your hobbies for ideas. Do you like gardening? Offer your services to those who want a pretty yard but don’t have the time to plant and tend it. Or maybe you’re good at repairing computers. Let friends and family know that your services are for sale.
4. Sell items online or throw a garage sale
You can drum up a substantial deposit for your emergency stash by digging through your closets and basement and cleaning up and selling unused items collecting dust, like the bowling ball you bought when you were in a league 10 years ago, the second crock pot you received as a wedding gift and never opened and the leather jacket that no longer fits.
Set up an online sales account for the merchandise or organize a garage sale. Make the event even more successful by holding a neighborhood sale. Banding together with neighbors enables you to get the word out more effectively about the sale and more items lure more shoppers.
5. Earmark unexpected income
Make an agreement with yourself to deposit any unexpected money you get into your emergency savings account. That way when tax time comes and Uncle Sam sends some green your way, you don’t have to debate with yourself about how to use the money. The same goes for rebates and bonuses.
6. Go without—sometimes
Rather than making saving a chore by cutting out your weekend trip to the coffee shop, try skipping your latte every other weekend and depositing the money into your emergency savings account instead. Or if you go out to dinner every Friday, try eating in once a month. You’ll probably find that such small sacrifices are easy to make and the resulting savings add up over time.
What’s one of your favorite tricks for adding to your emergency savings?
Photo Credit: 401(k)