The most important thing you can do to make your personal economy strong is to have an umbrella—a Contingency Fund with at least enough money to pay all of your bills for three to six months without a paycheck. Call it $10,000.
SAVE 10% OF YOUR PAYCHECK. It may sound like a lot, so if you can’t do 10, start with 5% or even 1% percent and build up. Deposit the money automatically into your Contingency Fund; you won’t miss what you don’t see in the first place. Okay, you’ll miss it for the first few weeks, but soon you really will not miss it.
GET RID OF NON ESSENTIALS. Give up the little things, such as cable TV, eating out, gym membership and entertainment.
CUT VARIABLE EXPENSES. You can’t cut off your utilities, stop eating or give up driving. But you can reduce the cost of the food, energy and fuel you buy. Opt for the cheapest supermarket and gas station. Turn out the lights; run only full appliances.
QUIT SMOKING. This suggestion requires no explanation. Although it does beg the question, who can even afford to smoke these days? At about $7 for a pack of smokes (U.S. average) that’s a $2,555-a-year habit. And in New York City it’s double that. Yeah, $14 a pack.
STOP PAYING BANK FEES. If you’re paying a $7.95 (or higher) per month fee for the privilege of maintaining an account, stop! Open an account at an online bank (they pay better interest rates anyway), like Ally Bank, that doesn’t charge a monthly maintenance fee for checking or savings accounts. Or check with a local credit union for free personal checking accounts. Some banks even offer free business accounts.
PULL BACK. Stop sending more money than required each month to your credit-card companies, mortgage lender or any other creditor. It’s admirable that you’re being diligent in repaying the debts, but if you continue to do this while living without money in the bank, you’ll be setting yourself up to fall even deeper in debt.
CLEAN OUT. Take a look through your cupboards and closets. Identify everything you haven’t used in the past six months. Turn what you don’t need into cash on a website like eBay or Craigslist or hold a yard sale. Or donate to an IRS qualified chartiable organization and take a tax deduction for each item’s fair market value when you itemize your federal tax return. You’ll maximize your deduction (which means you’ll reduce the amount of tax you owe) with “Money For Your Used Clothing,” a certified and guaranteed workbook that helps you determine the highest market values that the IRS will allow. You can order online or call 800 550-3502 Mon.-Fri., 8:30-5 MT.
ADJUST WITHHOLDINGS. Use the 2016 Federal Withholding Tax Calculator to make sure you aren’t having too much or too little income tax withheld from your pay.
INCREASE YOUR INCOME. Get a second job. Or third. Work more hours at your current one. Get creative by making money doing things you already love to do, like dog walking or selling handmade items.
GIVE UP YOUR LANDLINE. Over 38 percent of American adults have given up their land-based telephone service. Are you in that group? If not, why not? Basic service costs at least $25 per month in most markets.
TAKE YOUR LUNCH TO WORK. Have you figured out what you’re spending per year on eating lunch out? At $10 a day, you’re spending $2,500 after-tax dollars on lunch. Just think of all the dinner leftovers you throw out that could easily be tomorrow’s lunch.
STOP AT THE MATCH. If you are contributing to a retirement account like a 401(k) or 403(b), don’t stop now, but limit your contribution to the amount your employer matches. Ask your employer how to adjust your contribution. Once you have save to your goal, you can always change your contribution again.