Saving money may seem impossible these days, especially because there are so many choices for products and services. In addition, the “buy now pay later” mentality is very tempting. However, there are some things that can be done to save for a rainy day, as we all have these “rainy days”.
1. Calculate how much you need to save
Financial advisors claim that you need to have six months’ worth of monthly expenses saved in an emergency fund. This can vary with an individual’s situation, but six months seems like a good average. You can do this with a spreadsheet or use an online emergency fund calculator. The result might seem daunting, but it is doable. The key here is to start planning your personal finance.
2. Have a backup plan
It might take some time before you have saved enough money for your emergency fund. Having a backup plan in the meanwhile could save you lots of frustration in case a sudden expense appears. There are cheap credit cards and online credits that will cost you nothing until you use them.
3. Find hidden cash in your budget
Most people have little extras built into their budget that they may not even be aware are there. For example, buying that latte every morning before work adds up. A little self-denial now will add up in savings over the long haul. This point ties into the next one:
4. Uncover costs that are “cuttable”
Instead of deleting all items completely, see if you can reduce them or negotiate lower prices on the bills you have. For example, most of us have cell phones. See if your carrier will lower your rate, maybe with an alternative phone plan. Remember, your goal is to trim unnecessary expenses from your budget and use these trimmings to save for a rainy day.
5. Set aside small amounts regularly
Similar to investing, regular payments to yourself add up. Most banks will allow you to set up a savings account to draw money from other accounts automatically. This will help you to save for a rainy day without realizing that you are doing so. Some credit cards also offer automatic savings.
6. Throw all of your change into a jug daily
It is amazing how much this extra change can accumulate. This is a good way to start/add to your rainy-day fund, especially if you pay for things with cash. If you just get into this habit daily, it is also a good way to save painlessly for a rainy day.
7. Have a garage sale or yard sale
This can help you de-clutter as well as bring in extra cash for your rainy day fund. You can do this over a weekend and earn some money for your fund. Whatever you do not sell can be donated to a charity for a tax credit.