Have you ever experienced an unexpected expense such as a car repair, an unplanned visit to the doctor or dentist or replacing a broken appliance? I know that I have. According to a 2017 Federal Reserve report, when faced with a hypothetical emergency expense of only $400, 4 in 10 adults stated they were unable to cover such an expense. A relatively small unexpected expense can be a hardship for many of us.
While saving is not easy, especially now with a high inflation rate. It is, however, a key principle to building wealth. Saving money for those unexpected expenses will help when “life happens”. How can a habit of saving be developed for those unexpected expenses?
Strategies for Saving
- Small amounts add up: Start small but be consistent. Setting aside any amount of money helps to form a savings habit.
- “Pay Yourself First”: Paying yourself first simply means setting aside money before there is a temptation to spend it. Arrange with your financial institution to automatically transfer a certain amount from each paycheck to savings. Over time, it will add up and you will be building wealth.
- Practice Delayed Gratification: Resist temptation but not spending online or going shopping. Avoid overspending by eliminating impulse buying. Trim spending by purchasing only what you need. Finally, live a frugal lifestyle.
Questions to consider before making a purchase:
- Do I really want and need this?
- Can I afford this purchase?
- Is it even good for me or my family?
- What would happen if I could not have it?
- Am I buying this because it is on sale?
- Am I buying this because I am depressed?
- Is there an alternative I can accept?
- What must I give up to have it?
- Is there a better way to use this money?
America Saves Week
While savings is not easy, America Saves captures the journey to start saving for the unexpected. When is the best time to save? Everyone’s financial situation is different. For some, it may be with each paycheck, for others it may be when they receive a bonus or tax refund. Figure out what works for you, then make a commitment to #Save4TheUnexpected. #ASW2023 @AmericaSaves #AmericaSavesWeek
Ann Zander says
These are qreat questions to ask myself “before” purchases!!!