I wrote this article as part of the group writing project over at We're in Debt.
Did you know you can buy peace and freedom? Every dollar you pay toward debt buys you freedom. Every dollar saved buys you peace. Isn’t that what everyone wants? Peace and freedom, aren’t those things worth working for?
I think the easiest way to build up your emergency fund is to set up your direct deposit. Decide how much you would like to save (10% of your income is recommended, but if you can’t afford that don’t get frustrated, put aside what you can) and set up that amount to go into your savings account. If the money is too tempting then set it up at a different bank from where you have your checking account. That way you can’t just transfer it online. If you have to trek all the way across town during normal business hours you will be less likely to impulse shop with those funds.
Having a savings account gives you a grace period between a bad event and the consequences of that event. If you lose your job and you have savings, you have a grace period before you start to feel the pain. You have time to make a plan. You can find another job, reduce expenses, ask for help. If you don’t have savings then are left with nothing but a stack of bills that need to be paid. You have no time to plan, no grace period. Your choices are limited and things start to fall apart.
“But what about my debt?” You ask. Yes, pay off your debt as fast and furiously as possible. But that doesn’t mean you don’t put a little something aside for emergencies. Life happens, you need to be prepared. You don’t want to have to use a credit card if something comes up. Even putting $50 a month aside will help if you get into a bind. Once you have your debt paid off you can really start funding your savings account.