Its important to save money, not just for emergencies, but also for major expenses like homes, cars, education and retirement. Most financial advisers recommend that you have the following:
- At least enough to cover three months of expenses (rent, car notes, utilities and bills)
- If possible, set aside at lease one-fourth of your income each year for big purchases (like a home purchase) and retirement.
If you are not able to meet the savings goals above, start by saving a little at a time. First create a budget that you are comfortable with, then look for ways to cut back on expense or creating more income.
How to Start Your Rainy-Day Fund
Set Your Goal
Use an online emergency calculator to figure out how much you need to save. Or, just do the math yourself. Experts say that you should at least save for 6 months of expenses.
Set Aside Small Amounts Regularly
Most savings accounts will let you setup automatic contributions at the frequency of your choice and transfer money from your checking to your savings. Or if you use direct deposit at your job, you can request to have a small portion of your check deposited into a savings account automatically when you get paid. Another option is an app called Digit, which you can connect to your bank account, and it automatically saves your money with little effort. Through Digit you can setup multiple accounts to save for various goals like a rainy-day fund, student loan payoff fund, Christmas fund, etc.
Sign up for Digit today through this link and earn $5 toward your savings goal.
Find Other Ways to Make Money
There are a lot of creative ways to make extra money. You can get a second job or come up with a “side hustle”.
Cut Your Costs
Find expenses that you can cut from your day-to-day life. Here are a few examples below:
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- Negotiate a lower cell phone bill
- Get rid of cable and sign up for a cheaper service like Netflix or Hulu
- Stop spending money on eating out and instead pack a lunch
- Stop or reduce your daily Starbucks runs and instead make coffee at home
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