Saving for emergencies can seem like an impossible goal. My budget is already tight, you say. How am I supposed to save money? This is a question asked by millions of consumers every day. The good news: it’s possible to prioritize savings without overhauling your life. A few small changes could help you establish a nest egg to protect you from unforeseen expenses that can cause credit damage. For example:
- Count the dollars and cents. Like an athlete counts calories, it’s time to dig deep and pay more attention to how your money is spent. Download a budget-tracking app like Mint.com or Spendbook to help you visualize your purchases. Set limits and compare weeks to see where you can afford to cut back and redirect your income to savings.
- Cut one unnecessary expense. Building up savings shouldn’t feel like a punishment, which is why you shouldn’t cut all the things you love in order to satisfy your goal. Begin with one thing—whether it’s going out too often, take-out meals or an overpriced cable bundle—and slash it from your budget. Use your savings to pad your bank account and consider yourself successful. Financial health is all about balance. You can still enjoy your lifestyle while saving for important expenses.
- Withhold less from your paycheck (safely). Did you receive a large tax return this year? Unless you had an overwhelming list of deductions, there’s a good chance you are withholding too much from your paycheck. Although it’s usually unwise to withhold too little, consider reassessing your decision in order to keep more funds liquid and accessible. Use the IRS’s calculator or speak with a financial planner to help you make the decision.
- Profit from spring (or summer) cleaning. Spring cleaning is behind us, but summer is the perfect time to purge unwanted items and earn a profit in the process. Take an inventory of your home and consider selling underappreciated items on eBay, Craigslist or even using your own yard sale. Pocket the cash for emergencies and enjoy the benefits of a more functional home.
- Use credit repair to your advantage. Credit repair has the power to cut stress and add up to big savings. As your score increases, use those savings to protect yourself from future credit dangers. Look for advantages in the following areas:
- Interest rates. Better credit equals lower interest rates for your existing consumer credit cards and future deals. Pass those savings on to your bank account for an instant and pain-free method of emergency funding.
- Fees. Late payments are bad for your credit and your pocketbook. Use your budgeting app as a reminder to pay your bills on time to avoid the consequence. Why spend $50 on a late fee when you could save it instead?
- New benefits and rewards. The credit elite have access to the best interest rates and credit accounts. The latter is stocked with deals like frequent flyer miles, cash back, shopping discounts and more. Celebrate your success by moving up the credit ladder and taking your savings to the bank.