How to Get into a Saving Routine for Your Emergency Fund

I’ve been “preaching” to everyone that they need an emergency fund even before I became a Dave Ramsey Endorsed Provider. If something major breaks, you’ll have to come up with some funds before the insurance company pays, and putting charges on credit cards is not great as a cash advance and interest rates are high.

Start Saving Early

Yes, I know that banks are paying less than nothing for holding onto your money, but if it is somewhere other than under your mattress or in a tin can buried in the backyard (apparently one of my great grandfathers used that method of banking) there is no excuse in saving.

Even some children I know have a savings account for birthday and holiday money. They get to keep half and then they must put the other half in the bank. Smart parents have this rule knowing that the money compounding over their work life will result in perhaps millions (banking interest ebbs and flows can set this back).

It’s Never Too Late to Start

It is never too late to start saving. I advise clients who “just can’t save” to do the easy bank sweep from checking to savings every month via a reoccurring transfer. Pick a day of the month and have it move from checking to savings.

Do your budget (there I go again with that budget word) and see where you may be overspending in non-essentials. Instead of buying coffee for $10 every morning on the way to work, take a cup from home one day a week. In a month there is $40 that can be moved to savings. After a year you’ll have $480, which is almost half of the $1,000 I recommend as the minimum emergency fund.

Save Your Change. No, Really.

I have a huge Mad Money jar on my kitchen counter. All the loose change that I get tired of lugging around I place in the jar.

One year it actually paid for some work I had done on my home. Luckily the bank I frequent had a coin sorter with no additional charges, so I basically took the slip and had the money deposited in my account, and tada! That made the jar lighter and now when it seems to be too heavy I go and find out how much my change is made in savings.

Save for Your Needs, Based on Your Needs

Everyone has different needs and perhaps $1,000 is not large enough for the emergency fund. Adjust by taking your raise or bonus and adding it to the fund. You were able to live on your take-home pay before so taking the raise or bonus will not affect your spending and the upside is more in savings faster!

Save in Investment Accounts

You can make automatic sweeps to investment accounts as well. Seek out a financial advisor who will take on a small investor and set up an account with mutual funds or another investment vehicle and sweep money every month. Some accounts only need to be funded with a small amount (there we can use some of our emergency money) and reinvest your dividends to have your account grow over time.

I am not a licensed stockbroker or advisor, so I cannot give you advice, but I can speak from my personal experiences and tell you that if I panicked every month when the statement came, and I saw a dip I would be grayer than I am! But if I look over the years my small contributions have grown.

As Benjamin Franklin so wisely said, “a penny saved is a penny earned.” Basically, saving is like earning more money as it grows with interest. Get out of those piggy banks!

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