Create a Habit of Saving

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Savings Habit

Several years back, when things were really tight, I managed to open a savings account with a very small amount of cash. The key was that I had to set up an automatic recurring draft from my checking account to my savings account. I set that draft up for every payday. At first it was something small like $10. At the time, that was hard to adjust to. It's sad, but true. Over the years, that amount has increased, and I am grateful that I set up that account when I did. It's proof that even with the small amount that I had to work with, I could still establish some sort of habit of saving. If I can do it, anyone can.

Start an Emergency Fund

Dave Ramsey in his book, The Total Money Makeover, discusses what he refers to as baby steps toward getting out of debt. It's the focus on each step that makes the difference and gets a person out of debt. The first baby step is to have $1,000 in an emergency fund. The idea is that if you have an emergency fund to draw on when a tire blows or the hot water heater fails. 

Once you've saved $1,000 or $500 for those who make less than $20,000 a year, put it someplace where it won't be easy to get to. If the emergency fund is too easy to get your hands on, it will be dipped into every time there is an "emergency" that it isn't really an emergency. 

That has been part of my problem. I haven't saved as much as I would like, in part because I've dipped into it way more than I should. Yet, I am extremely glad to have the account and a little cash set aside for emergencies. One of my goals will be to save $1,000 and move it where I will have less access to it for impulse purchases, and yet, still be able to get to it when there are real emergencies.

Next Steps:

Continue working on the budget
Save $1,000
Get real about the debt

Links:

www.totalmoneymakeover.com