In Ideas for Staying out of Debt I plan to cover my ideas/plans on how to stay out of debt.
This is one issue i cannot stress how important it is. If you do not have money saved back at all ether as a buffer or as a separate account and disaster hits, how will you pay for it? But anyone who has read any other finance site should know this. Yet how many of us do this? I myself have been very bad at doing this, and the results are never good. But when money is in my account it is good. Take something recent that happened, my windows got broken. There was a bad storm and my back windshield and two side windows both were broken. At the time I had money to cover it and I could just write a check and pay for it. But had I not had any money in my account, it’s likely I’d still be driving around with broken windows.
So how should you save? This is really an opinion question. What works for one may not work for someone else. I’ve read about automating your savings and I even tried it, but for me being self-employed one month on the scheduled date there wasn’t enough and I haven’t used it since. But for someone on a regular job this would be an excellent way to start saving. You would start with say $5 or $10 a week and just slowly increase it till your at your comfort spot for where you want your savings to be. (Topic for another day)
Another way of savings which is what I do for taxes is every single time you get paid, save a percentage of that pay before you have a chance to spend it. Which for me has worked out great, come quarterly estimated tax payment times I’ll have no issue sending it in. But I only did this after realizing my flaws with not moving the money out. I would believe my business was doing good and blow it on stuff I didn’t need. Then when it came tax time (about now) I would freak out and be angry at myself for not putting the savings in a savings account.
While for some people, they may not need a savings account. I personally know people who will keep a buffer of a few thousands and this works out great for them. Just try out different approaches till you find the one that works. I know before automated savings were popular some would make their own “payment slips” which would be a deposit slip with the amount already written and would mail it to their bank like it was a bill. Which I tried that method and it worked out good for a targeted savings goal. Once you find what works for you, just stick with it, do not one month forget about it and say oh, I can make it up. If anyone is like me, they never will make it up.