I like to think that I learn from my mistakes. I’ll point to improved cooking skills (at least a little bit), stronger writing skills (at least I hope!), and better budgeting as proof of that. But there’s still a tendency to fall back into old habits. As we finally head into spring, my husband and I have been looking at outdoor furniture, landscaping and pergolas. When it comes to improving our outdoor space, we have spring fever, and it’s hard to pass those deals up, especially with a small tax refund sitting in our Afena account.
Don’t get me wrong, we’re still very aware of our budget. We know we need to continue to build our savings account. But being aware and actually doing it aren’t the same thing, especially when you’re picturing outdoor family reunions in your newly decorated backyard. We all know we need to save more, but we still don’t actually do it. Why is that?
Not having an emergency fund is like walking a tightrope without a net. No one likes to think about it, but what you would do tomorrow if you lost your job, wrecked your car or had to miss work due to illness? It may seem impossible to create an emergency fund, but there are always ways to squeeze a few extra dollars out of each month. Here are a few ideas:
1.) Start small. If you save $5 a week for four years, you’ve got an emergency fund of just over
$1,000. Many people stash every $5 bill they get in a coffee can or store all their loose change. You might also consider a 52-week plan where you save $1 the first week, $2 the second, and so on. These incremental steps can make a big difference in the long term – at the end of a year, you’ll have saved almost $1,400.
2.) Pay yourself first. Think about your savings as another bill. This mode of thinking prevents you from treating the money as discretionary. Make your savings as important as your house note, car payment, and utility bills.
3.) Look at recurring expenses. If you’re honestly spending everything you get on your monthly bills, it may be time to look at them. Consider cutting your TV services or switching to a pre-paid cell phone plan. Simply giving up a premium movie channel for a year could save you as much as $240. These don’t have to be long-term choices. Your goal should be to make temporary sacrifices to ensure yourself against future loss.
4.) Don’t spend it. Your emergency fund should only be used for actual emergencies. Ask three questions before you take even a dollar out of your emergency fund. Is the thing I’m paying for absolutely necessary? Is there nothing I can cut back on this month to pay for it? Do I have to pay for it right now? Unless the answer to all of these questions is yes, leave the money where it is.
April is National Financial Literacy Month, so while I’m window shopping for patio furniture, this helps remind me that a new porch swing will be nice—when I’ve budgeted for it. For now, I’m happy making plans and window shopping - that’s half the fun anyways!
On Thursday, April 28th, I’ll be at the Marion Public Library from 6:30 – 8:00. We’ll be talking about budget planning, building credit, and making a plan of action for how to take control of our financial lives. I hope to see you there! I’m Claire, the Afena blog mom. Thanks for reading.