When life gives you lemons, a savings account can make the difference between staying afloat and sinking like a stone. Most people don’t have more than a few hundred dollars in their savings, or even less. If an unexpected bill arises or they lose their job, they can’t cope. It doesn’t take long for life to fall apart when you have no money to pay the bills and your mortgage company wants to foreclose. Here are some tips for building up a rainy dayfund.
Have a Savings Target
Make saving for a rainy day your priority. Ideally, have at least three months of income in your savings account. Even better, try and save enough to keep you afloat for six months or longer. This ensures you don’t have to panic if you lose your job or are struck down by illness or an injury.
If this target seems well out of reach, start small. Save as much as you can afford each month. This pot will grow over time, and by the end of the year, you could have a decent amount saved.
Look for Areas Where Savings Can be Made
It is pointless trying to save money if you are hemorrhaging money via expenses you don’t need to pay, such as a gym membership you never use or a subscription to a beauty box you can live without. Go through your monthly expenses to see where savings can be made. Cancel any subscriptions you don’t use or services you don’t need.
Look at other areas where savings can be made, such as taking a packed lunch instead of buying a sandwich, or shopping around for a cheaper utility deal. There are always ways to save a bit of money. Most people don’t bother switching cell phone or cable providers once they have signed up, but if you are out of contract, you can probably get a better deal somewhere else.
If you have debt, such as a credit card balance or a personal loan, look to see if you can consolidate more than one debt into a single payment. This makes it easier to save if your monthly outgoings are lower. It’s usually better to pay off debt than save, as interest rates on debt are always higher, but if you have zero savings, build a small rainy day fund first before you tackle your debts. This will give you a small cushion in case of an unexpected bill.
Set Up an Auto Transfer
Saving is a lot easier if you never actually see the money in your account. Set up a transfer from your checking account into a savings account on the same day your salary is paid in. This is a lot easier than moving money out later in the month when you have less to play with. Money transferred at the start of the month is psychologically easier.
Make Use of Discounts and Coupons
Look for coupons and discounts before you buy anything. There are lots of sites that list the latest deals and discounts, such as Upgraded Reviews. Use them and you will never pay full price for anything again.
Work in the Gig Economy
Sometimes, one job isn’t enough to allow for savings, so it makes sense to earn some extra income if time and circumstances allow. Even if you only work a few extra hours a week, the additional money you earn will make a big difference. For example, you could pick up shifts as an Uber or Lyft driver. Working a couple of evenings a week will earn you a decent income, which can be funneled into your rainy day fund.
Be consistent when saving and over time, your savings will grow. And once you have a nice little nest egg, it will provide a useful safety net for emergency expenses.
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