Money-Saving Tips for a Rainy Day

A woman drops a dollar into a piggy bankSaving for a rainy day is conventional wisdom that is too often ignored.
In times of uncertainty, having funds to tide a family over during a period of joblessness is more important than ever. With the right strategies, you can begin to put money aside before the storm clouds start to appear.
Develop a money plan that clearly shows you all sources of funds, and where your money goes each month. Divide your plan into common expense categories, such as housing, food, transportation, entertainment, education, etc. Keep a file of your receipts for each category, no matter how small. Find any unnecessary expenses and reduce spending these areas.< Choose a savings goal. You may end up with several goals, but your first savings goal should be to build up a cushion of cash to cover standard monthly expenses. If you’re a family, aim for a three-month cushion. If you are a single-income household, then a six-month cushion is recommended.
For each savings goal, set up a separate account. This will help you track your savings progress and ensure that your vacation or new car fund doesn’t get mixed into your rainy day or college fund.
Make savings automatic when possible by designating a portion of your paycheck to your rainy day account. Financial planners generally recommend saving 10 percent of every paycheck. If that is too much, do what you can, but save something every paycheck – it will add up.
Go back to your money plan and look for opportunities to save. For example, you can “brown bag” your lunches four days a week and end up saving $1,000 every year. Examine your phone bill to see if there is a less expensive plan. Comparison shop and negotiate. Shop at secondhand stores instead of department stores. Reduce utility costs by dialing down the heat/AC and turning off lights and electronics when not in use.
From: Ramp Up Your Savings, Consumer Report Money, Spring 2009