By Barbara Pronin
If you want to build the emergency fund you know you need to have—but find yourself living from paycheck to paycheck without saving a dime—it’s time to put a no-fail savings plan in place. Here are three tips to get started, courtesy of The Motley Fool:
1. Strictly Track Spending – You may think you know where your money goes each month, but chances are you have no real idea about how much is slipping through the cracks. For at least one month, list every penny you spend, from rent and utilities to your morning coffee, those hard-to-get concert tickets and the pair of shoes you found at half-price. Take a hard look at your spending and figure out exactly where you can cut out or cut back—and do it!
2. Pay Yourself First – You can’t spend what you don’t have, so sign up for an automatic savings plan so that a set portion of every paycheck goes automatically into savings before you can spend it. Once you’ve saved enough to cover three to six months of living expenses, focus on starting to contribute—or contributing more to—your employer’s 401(k) plan, if offered.
3. Help Resist Temptation – Impulse purchases can derail anyone’s saving efforts. Avoid sales unless there is something you really need, or stay focused only on what you came to shop for. Take only enough cash for what you need to buy—leave your credit card at home. It’s discipline that counts!