| Bank Savings Equals Debt Prevention |
| By Credit Federal |
Published
09/30/2007
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Financial Tips
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Free tips can help poor people save emergency money
Emergencies happen, so it makes sense to have emergency cash. Unfortunately, poor people and those who find it difficult to save money (hopefully you do not fall into both categories), are rarely prepared for a personal financial crisis.
With just $500 saved and tucked away, you can be prepared for many emergencies.
Start by keeping an extra $100 cushion in your checking account. By keeping this cushion, you'll greatly reduce your chances of bouncing a check. As an additional safety margin, sign up for overdraft protection just in case you make a math error and accidentally write a check that exceeds your account balance.
Next, build up a $400 savings account. Although $400 is no fortune, it will cover large portions of common financial emergencies such as auto and appliance repair and higher than expected utility bill. Even for emergency expenses over $400, you'll at least reduce the amount you need to borrow from other resources.
Once you get the $400 saved, do not use it unless you have an actual, bonafide emergency. If you're in credit card debt or need to repay a payday loan, you need to get out of the habit of looking for quick solutions for unexpected expenses. The pain of taking money out of savings may help you look for alternatives to spending the cash. If the spending is absolutely necessary, you're better off paying cash than paying interest on money borrowed from credit cards or payday loans. Then you can concentrate on rebuilding your financial safety cushion. Eventually try to increase your cash cushion into a real emergency fund. You may; however, first resolve more pressing financial needs such as paying off high interest rate debt as well as saving and investing for retirement.
Tips on how to accumulate your initial savings account cash:
- Use your tax refund.
- Go 30 days without any unnecessary expenses
- Sell items you no longer use
- Don't spend your change (nickels, dimes, quarters)
- Cancel subscriptions
- Set up auto bill payments to avoid late fees
The average income earner gets a pay raise every year but has less money to spend due to inflation, health insurance and other costs.
How much you save has little to do with how much you make, so forget excuses. Here are ways to find money you didn't even know you had.
"SAVINGS" - When you hear that word, do you feel like a failure? According to one study, 75% of Americans say they know their savings are insufficient.
Retrain your brain - Saving money is a state of mind. Before you can start, you have to renounce wasteful spending and stop believing you need all the stuff you've been spending money on.
Accept a frugal lifestyle - Become a closet cheapskate. Think of ways to fix what you have instead of spending greater funds to replace them.
Get in the spirit - Search for all the free tips you can find on how to live cheaply, save money, cut costs, etc.
Keep your savings a secret - When friends want you to go with them on a spending spree, decline.
Make your life more affordable - Think of ways to prevent unnecessary expenses and to save.
Have money automatically deducted from your paycheck and deposited into a savings account.
Eat more fruit and vegetables and less meat. You could save $25 a week, which equals $100 a month.
Never spend a cash surplus - Save income tax refunds, birthday money, etc.
Negotiate costs. Just about every store, bank, airline, credit card issuer; and just about everyone, will negotiate lower prices when queried. Also look for discounts that may apply to you, such as senior citizen, student, and military discounts.
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