Here’s a Foolproof Plan for Saving $10,000

The most important thing you can do to make your personal economy strong is to have an umbrella—an emergency fund with at least enough money to pay all of your bills for three to six months without a paycheck. Call it $10,000.

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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

Look seriously at all of ways money is leaking out of your life—things that are not essential to your life 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; turn down the heat. Eat in, go meatless a few meals a week.

Quit smoking

This suggestion requires no explanation. Although it does beg the question, who can even afford to smoke these days? At about $5.50 for a pack of smokes (U.S. average) that’s a $2,007 per year for a pack a day. And in New York City it’s double that. Yeah, $12.85 a pack average.

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 until your emergency fund is funded. 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’re 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.

Adjust withholding

Use the 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 the landline

About 41 percent of American adults still pay for a landline phone service. Are you in that group? Basic service runs $15-$30 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.

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2 replies
    • Deb says:

      I would think it’s to make it so you can build up the contingency fund more quickly that’s why it was suggested that you can go back to a higher contribution once the contingency plan is in place

      Reply

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