The most important thing you can do to make your personal economy strong is to have an umbrella—an emergency fund with enough money in it to pay all of your bills for six months. And it needs to be safe and secure in a bank account. You read that right—half a year’s income! Wait. You can’t even imagine being able to save that much? No worries. The secret to getting there is to start small. Let’s say you make $1,000 your emergency fund goal.
Weekly, or as you get paid, save 10% of your paycheck. Too much? OK, start with 5% or even 1% and build up from there. Just start!
Make it automatic
This is going to be hard, but I know you can do it: Make feeding your emergency fund—whatever the amount—the very first bill you pay, before anything else.
While you are opening that account, set up an automatic deposit authorization. This will give your bank authorization to automatically transfer the amount you designate from your checking account straight to your emergency fund. Here’s a secret: You won’t miss what you don’t see in the first place. Okay, you’ll miss it for the first few paychecks, but soon you really will not miss it.
Get rid of non-essentials
Give up the little things such as cable TV, eating out, and gym membership and that landline phone you have but never use. That’s a start, you’ll know instinctively how to add to this list.