Most personal finance sources recommend that an emergency fund is set up once a decision is made to become financially independent. What is an emergency fund? It is an accessible savings account where you keep cash for true emergencies, like the loss of a job or a medical emergency. Financial advisors usually recommend that they should contain enough cash to cover three to six months of all expenses.
Consumerism Commentary, a great blog for anyone interested in personal finance, listed 50 tips to assist a beginner that may be pressed for money. These are a few that I think are important. The main article will be provided below; I highly recommend it.
1. Open a high-yield online savings account with as little as one dollar.
I chose ING Direct because of its user-friendly website and ease of signing up. It is also known to be amongst the highest with respect to yields.
3. Empty your pocket change into a jar every night.
This adds up and if you understand the power of compounding, every penny counts.
4. Bring your coin jar to the bank every month.
An obvious follow-up to #3.
9. Bring your own lunch to the office.
This is big, especially for you new graduates out there. It is really not necessary to dine out every day. You can save so much money if you made sandwiches and brought to work. $5 minimum a day, $25 a week, $100 a month, $1200 a year. Don’t know where you can get lunch for $5.00 though. So this is really a conservative estimate.
11. Drink soda rather than alcohol when you are dining out.
I am not a regular drinker of alcohol, but it is an expensive activity.
17. Create an automatic deposit to your savings account.
This is a set it and forget it strategy. I recommend this because you learn to do without the money that goes to a savings account that you don’t touch. This is how I am building my Emergency fund. Every month I add $500 to my savings account through an automatic deposit.
19. Don’t consider your emergency fund part of your spending money and keep it hidden.
This is very important. I don’t recommend touching this fund unless for emergency purposes.
46. Don’t be an early adopter of new technology.
I had a professor that said anyone who bought the first iteration of the IPhone were suckers. Why? well it cost them $600. A month or so later, Apple cut the price in half. Now, the new IPhones cost only $199. It always pays to wait when it comes to the new technologies. It is only a matter of time before the prices go down. I am waiting for the Amazon Kindle to go down as I type this article.
49. Consider adopting a frugal philosophy, at least until the emergency fund is in place.
A great way to end it off. A philosophy is a way of life; a way of thinking. Your thoughts eventually become your habits and is then reflected in your lifestyle and personal wealth. This may be the most important of them all, especially if done throughout one’s life.