If you're in debt and think you can't possibly afford to put money in an emergency fund, consider how you ended up in debt in the first place. Chances are, money in a savings account could have helped you from going into the red or at least softened the fall. Instead, you may be interested in these tips for setting aside cash for those inevitable rainy days.
Though the standard savings advice is to save 10 to 15 percent of your gross income on a monthly basis, this is no doubt impossible for you to do at this time, especially if you're seriously involved in debt reduction. Keep in mind that saving something is better than saving nothing at all. If you can only set aside $10 a week right now, that's still $520 in a year.
Automate frequent savings deposits
Avoid waiting until the end of the month to save. You'll most likely be all out of cash by then. Instead, set up frequent small transfers from your checking into your savings. Squirreling away $30 a week won't seem to stretch your budget as far as $120 at the end of the month, but it adds up to the same amount.
Round up in your checkbook
A nearly painless way to accumulate money that can then be directed into your savings account is to round up each time you make an entry in your checking account. For instance, if you pay $43.44 for a trip to the grocery store, round that up to $44, which gives you 56 cents for your savings account. You'll have a tidy little sum to put in your emergency fund at the end of each month and are likely to be pleasantly surprised by what it amounts to in a year.
Convert to cash and keep the change
If you are working on debt management, cash is a preferred method of payment. As a finite resource, it works well by helping to keep you within budget, which means you won't overspend and not be able to save. Kick the cash concept up another notch and stash all of the change. Every two to three months, count the coins and deposit them into your emergency savings fund.
Saving for emergencies now one penny at a time will help you pay for the unexpected when it occurs, which can only help with debt.
About the Author:
Julie Bawden-Davis is a Southern-California-based writer specializing in personal finance and insurance. Since 1983, her work has appeared in a wide variety of publications, including Family Circle, Ladies' Home Journal, Parenting, Entrepreneur and The Los Angeles Times.