5 Simple Steps to Start (or add to) Your Emergency Fund

This blog post was originally written by Marie Vadala for “How to Shop for FREE’

If you’re  following How to Shop for FREE you’ve probably at least dipped your toes into the world of couponing.  It’s a great way to save some money and stretch your budget. When you first started couponing you probably had to make some adjustments to the way you did your shopping and maybe you’ve even built up a little stockpile to ensure that you have some extras so you’ll never need to pay full price again. It takes some planning but after a while it becomes second nature.

If couponing could make such a big impact on your life, you have to wonder what else you can do to contribute to what may already a pretty frugal lifestyle.  You’re already saving money and eliminating waste.  If you look a little deeper into your spending you can probably find other ways that you could save time, save money, and make your life better with just a few simple changes. Let’s expand this way of thinking to be able to put money into a savings account/emergency fund.

There’s nothing worse than having a financial emergency come up and not knowing how you’re going to pay for it. More often then not, you’ll  end up paying for your emergency using a credit card or taking out a loan. These options always cost more in the long run due to the interest that you’ll be paying. Part of living a frugal lifestyle is eliminating waste and unnecessary expenses. That interest would definitely qualify as an unnecessary expense that can be eliminated by some planning ahead.

Here are some tips to get your emergency fund going:

1. Throw your change in a jar at the end of the day – Most of us come home at the end of the day with some loose change in our pockets. Set up a jar that is in a convenient place and simply deposit your change in the jar when you get home. You’ll be shocked how quickly it adds up. Don’t be surprised if you have a couple hundred dollars or more at the end of a year.
2. Enroll in your bank’s “round up” program – Many banks offer some type of “round up” program. Every time you use your debit card your bank will round up the amount to the nearest dollar and deposit that round up amount into your savings account. For example, if your purchase is $12.75 the bank would round up to $13.00 and put the extra .25 in your savings account. Many banks even offer incentives for their customers to sign up. When I set this up with my bank, they matched my round up amounts for the first year. Who doesn’t like free money?
3. Use Coupons (You’ve already checked this one off the list) – if you’ve never used coupons then you’ve planned your budget without factoring them in. Start using coupons and then deposit your coupon savings into your Emergency Fund. Putting the savings aside won’t impact your budget since you never planned on the savings in the first place.
4. Set up an automatic transfer from your Checking Account to your Savings Account – Out of sight, out of mind. Most banks offer the option of setting up an automatic transfer from your Checking Account to your Savings Account. You can set it up weekly, biweekly, or monthly. The automatic transfer may even get you a free account. Many banks will waive a monthly service charge with an automatic transfer or direct deposit. Speaking of direct deposit, that is also an option. See your employer about depositing a certain amount from each paycheck directly into your savings account. Consider increasing this amount every time you get a raise. You’ve planned your budget around your current wages. A raise is a great opportunity to put some extra money in your savings (or increase your retirement account contribution – but that’s another post for another day).
5. Pay yourself first – At one time or another we’ve all committed to depositing any money left over at the end of the week into our savings. The problem with that way of thinking is that often there isn’t anything left over. We need to make sure that we treat our commitment to savings the same way we commit to paying any of our other bills. I’m sure you’ve never said, I’ll pay the mortgage if I have any money left over at the end of the week. Think of your savings account contribution just as you would any of your other bills. Plan it in your budget and pay your savings account when you pay the rest of your bills.

When you read through these suggestions, they all seem pretty simple don’t they?  Can you see how making a few small adjustments to your lifestyle can multiply in the benefits they provide to you? Obviously, this is not an all inclusive list.  It’s simply a starting point to get you on your way.