How do I save Money?
The Rainy Day Fund
Wow! What a boring topic. Spending money on clothes, electronics, holidays, new cars, etc is much more exciting than just putting it in the bank. Even I would rather have a new iPad than an extra few bucks in the bank. That kind of thinking is emotional and wrong, and I know it. Too many people today live paycheque to paycheque. Many unforeseen expenses such as car repairs, illness or even an ill-timed vacation are charged to credit cards, which can take many months to pay, especially when interest is added.
Our grandparents were very careful with money, usually because they did not have much of it. But most also put money in a savings account for emergencies. I recall that my grandparents wanted to have at least three months living expenses in the bank. I do not know if they ever succeeded in this but I do know they had a target.
A little at a time, even $20 per week, does add up. It’s hardest at the beginning when the fund grows so slowly, but over time those small deposits will become a significant cushion against unexpected expenses.
It may be difficult to resist spending money and saving it instead, but when the transmission on that old car needs fixing, or emergency travel is required, knowing you have enough money to pay for it is a big relief. And the big reward comes when your credit card bill has no balance owing, because your emergency expenses were already paid for.
Manage your money. Do not let your money manage you.
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Retirement Planning: Are you ready? Part I