Always Save A Portion Of Your Income
Who doesn’t have leftovers in the fridge? Even if you thought you could eat the entire meal you ordered, you likely had some to spare. And with home cooking, there are often leftover side items, like arroz or frijoles–even after you give some to your puppy, Macho. At any moment you could whip up a new meal with the leftovers and hunger pangs–be gone!
So why don’t we do that with our paychecks? The temptation to spend in exchange for pleasantries could be winning out but having nothing leftover won’t help you on days when you’re too tired to cook—or too broke to order food! With the job market fluctuating and companies downsizing—you don’t want to be caught losing your job or with an unexpected illness and not be able to cover basic necessities, like food and rent…!
Changing that mindset to save for a rainy (or hungry!) day will help you cover emergencies that arise when you least expect it. And it doesn’t have to be a massive change, you can take baby steps to building a savings. And your goal can start at $500, but eventually you will want to save about six months worth of expenses for major emergencies.
Start by taking 10% of every paycheck and stashing it away. No, not under your bed in a shoebox like abue! The best option would be an interest bearing savings account. Some banks require a minimum deposit in order to qualify and you might have to work your way up to that, but 10% of every paycheck is a good starting point.
List all the items you are tempted to purchase and rank them in order of need and want. After you’ve deducted 10% from your paycheck, you may be able to afford one of them. If you’re stuck between two items but can only afford one – consider whether it is a need or a want. Spacing out your spending over months like this will accommodate your new commitment to saving 10% of every paycheck.
Once you’ve reached the $500 emergency fund goal, you can apply the 10% to establishing a savings account that will be separate from your emergency fund. Eventually you will want to contribute to both so your emergency fund can cover six months worth of expenses and your savings can cover your retirement years. But go ahead and eat your leftover frijoles for now. All this thinking and planning makes me hungry, too!
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