Friday, 20 February 2015

A young woman holding a piggy bank with an emergency patch on it.

Try these ideas to spend less, earn more and grow your savings.

Want to build your emergency fund quickly? Cut a nonessential such as coffee, cable or takeout. Then deposit the money in your savings account.
Most personal finance experts agree that we should all have an emergency fund of some sort – a ready supply of cash to see us through life's rough patches. That cash can pay for a needed car repair, a leaky faucet, a lost or stolen smartphone or even living expenses for a short period of time in case of job loss. What the experts don't agree on is how much to set aside. Some say six months; others say three.  
Whatever the amount you decides to set aside for emergencies – even for a modest starter emergency fund of $500 or $1,000 – actually saving that money can be easier said than done. In fact, a 2014 Bankrate survey found that as many as 6 in 10 Americans say they do not have enough cash on hand to cover even a minor calamity like a $500 car repair. 
If you've been struggling to build your own emergency fund, the answer is simple: Spend less or earn more – or both. Here are some ideas to get you started.
Spend Less
Start with the spending side because it's easier, because it means developing good habits and because, as they say in business, cutting expenses goes "right to the bottom line."
1. Maintain a spending book. This is where it starts. Get a notebook and track your spending for a month, every cent. At the end of the month, sort your spending into categories (food, transportation, entertainment) and evaluate carefully. Interrogate every dollar that isn't going to necessities, and then interrogate your necessities. This is also the first step in building a budget, so keep the momentum going by setting up a budget, for free.
2. Eliminate budget busters. Yes, cable TV is a budget buster. Can you go without it altogether? Can you step down to a cheaper package? Saving up for an emergency fund will require at least some lifestyle changes: brown bag it, drink fewer Starbucks lattes, raise (or lower) the thermostat, shop second hand, take the bus to work on Fridays and eat a meatless dinner on Mondays. The good news is that several small changes can add up to significant savings over time.
3. Renegotiate everything. Everything is negotiable. Call up all your service providers, and ask for better rates. Tell your bank you want to pay less interest on your credit card. Ask your insurance company for a rate reduction. If anybody balks, shop around.
4. Bank the savings. Once you've gone to the trouble of evaluating your spending and then trimming where you can, make sure you "bank" the savings. Make depositing or transferring the money you save into your emergency fund part of your routine. If you decide to automate that transfer, send yourself a notification by email or text message. Watching your money grow is rewarding.
Earn More
If your cost cutting just isn't cutting it, savings-wise, you may need to get creative about bringing more money in.
1. Sell your old stuff. One man's trash is another man's treasure. If you have old stuff cluttering up your closets, turn it into cash on Craigslist or eBay, and put your earnings in the bank. This is a twofer: less clutter, more emergency fund.
2. Sell other people's old stuff. Depending on where you live, your local thrift stores and flea marts may be full of clothing, furniture and d├ęcor that fetch higher prices on sites like eBay. Bring your smartphone along on your next visit to the secondhand store, and look for price discrepancies you can profit from.
3. Get a side hustle. Since you eliminated cable during the cost-cutting phase, your nights and weekends are free. Can you wait tables, work retail, offer Lyft rides or take freelance gigs from Fiverr and TaskRabbit?
4. Check your withholding. While it's nice to get a big check from the IRS every spring, it's nicer to have the money now – and going into your emergency fund. Use the IRS' withholding calculator and adjust accordingly. 
5. Baby-sit or dog walk for friends and neighbors. For a fee, of course.
6. Rent your extra room. Make your place available on Airbnb for short-term housemates, or rent your room to a boarder (who may also help out with the utilities, too).
7. Sign up for focus groups. Marketers and pollsters are so interested in what you think that they'll pay for your opinion. Visit a site like, and earn $50 to $150 just for speaking your mind.
When you reach your goal – keep going! Only now, instead of steering your savings and extra earnings into your emergency fund, start directing those funds toward an individual retirement account or other investment fund, and watch it grow even faster.


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