Most experts advise consumers to have between six and eight months worth of expenses in an interest-bearing account that can be easily accessed in the event of an emergency. That means that if your monthly bills equate to $5,000, you’ll need between $30,000 and $40,000 stashed away to weather unforeseen financial issues. Getting to that amount means taking a hard look at your spending habits and implementing a savings plan. Here are a few things you can do now to start your savings plan:
1. Bundle your entertainment
Most people today have both cable and internet in their homes and rely heavily on them for entertainment and relaxation. You can save money on these vital services when you choose a company such as Suddenlink that offers specials and discounts when you bundle their services. With options for internet, television, telephone, security and video, most companies have a policy that equates to the more you bundle, the more you save on your bill each month.
2. Sell off your things
Beyond the basic needs that everyone has, there are bound to be possessions that you don’t really need – or even want anymore. Take a look at your kitchen, for example. Do you really need two crock pots and a pressure cooker, or would one appliance take care of your needs most of the time? What about in the garage? Do you really need several sets of tools as backups in case a crucial one breaks or goes missing? Chances are that you don’t remember a time when you did use those excess tools so you won’t even miss them. Post your excess possessions on your favorite local selling or auction site. You can also hold a yard sale for some instant cash that you can bank for your emergency fund.
3. Keep it simple
There are plenty of financial gurus out there that offer sensible plans that can help you reach your savings plan goal. One problem that many people face, though, is the complexity of many of these plans. Some allocate a specific percentage of your take home pay to specific categories like transportation, food, utilities, entertainment and the like. If that doesn’t work for you, consider putting the 50/30/20 rule into effect. This centers around three general categories of spending: fixed expenses, discretionary expenses, and savings goals.
You can allocate your take-home pay as follows:
* 50% for those expenses that are necessary. This category includes mortgage, car payment, utilities and the like.
* 30% for discretionary expenses. Charitable giving, a new tablet, and season tickets to your favorite sports team are just a few of examples that can be placed in this category.
* 20% should be earmarked for your savings goals, such as establishing an emergency fund, contributing to your retirement fund or paying into a 529 plan for your kids.
The above are just some examples are items that belong in the various categories, but they are not going to be the same for everyone. Food, for example, is a necessity but you can choose whether to eat out, which tends to be more expensive or save money by eating at home. If you rely on the internet to help you manage your money and pay bills, it might not be a discretionary expense for you. The trick is to make your savings plan flexible so that it fits your lifestyle instead of you trying to change to fit it.