21 Easy Ways To Save More Cash — When You Don’t Have Much To Spare

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Over 60% of us couldn’t survive in the same lifestyle if we missed just ONE pay check.  That’s a startling number.  With most of us having more credit debt than savings, we are just one misstep away from a serious setback in our financial future.  What’s even more startling is that we are SUPPOSED to have 3-6 months worth of living expenses saved, yet most of us would have to make huge lifestyle changes if we missed just one paycheck..  We need to save more money!

But you knew that.

It’s the most common piece of fincancial advice, and it’s universally agreed upon, you need an emergency fund.  We all know that, but what we don’t know is how to save cash, when we are barely making ends meet as it is.   So today we’ll look at some strategies for building up an emergency fund, for those of us who don’t have it so easy.

Why It’s So Critical
I don’t like to use the word “critical” often, because it’s often an exaggeration. But in this case, when we’re talking about the health of your finances, an emergency fund is definitely critical.

If you are having financial problems, the quickest way to relief are the simplest…  1) Cut back, and live below your means; 2) Stop accumulating new debt, you can’t get out of debt by signing up for another card to pay for your emergency expenses; and 3) Start an emergency fund.  $1,000 is a good round number to start with, but we need to gradually build this to 3-6 months of living expenses.  Don’t worry, it doesn’t have to happen immediately.

Here are a few reasons an emergency fund is critical to your financial health:

1. Stop getting into debt. When an emergency happens, our first reaction is to take on more debt.  Whether it be a loan from a friend or a financial institution, a new credit card, or even worse a pay-day loan, we’re all guilty of taking on debt, to pay existing debt.  Although it’s a short term fix, it makes for long term headaches.
2. Smooth out your budget. First things first, if you don’t have a budget, make one!  An emergency fund is of the upmost importance, because with emergency cash, you can navigate the potholes in life without having to completely overhaul your budget.
3. Prevent late fees. Most of us have had to overdraw our account, or pay late fees on a delinquent bill, but with an emergency fund we won’t have these problems.
4. Get ahead. If you can get ahead in your bills, even by a month, your stress level will decrease dramatically.  Imagine having the peace of mind in knowing that you can support your family for 6 months should you lose your job unexpectedly.

21 Strategies for Creating an Emergency Fund
Most of us were never taught much in the way of financial security in school.  Over half of high school students can’t even balance a checkbook upon graduation.  It’s not enough to tell you that you need to save more money, so I’ve come up with 21 ways that you can start putting more money in the bank, starting now.

Please note that you should choose the strategies that work best for you, and perhaps combine some of them if that works better.

1. Start small. The most disciplined investors are the ones that can always put something aside, even when they aren’t making enough to pay their bills.  If you can only afford $20 per paycheck, instead of getting discouraged about it, put it in your savings account.  $20 per paycheck gives you about $520 a year in your savings account.  Hardly insignificant.
2. Automatic deduction. There are many financial institutions that will auto-deduct an agreed upon amount and deposit in your savings.  If you have $20 every 2 weeks, start letting them auto-deduct it.  Out of site, out of mind.
3. Pay More Taxes. This isn’t a popular choice, but you can always pay extra taxes.  Instead of writing down the bear minimum of witholding on your tax forms, have them take out an extra $20 from every paycheck.  It’s not a great option, because you lose potential interest that you’d gain had it been in a savings account, but it’s an easy way to save.  You’ll of course, get this money back on your tax return.
4. Treat it as a bill. Don’t think of saving as a luxury.  Pay it just as you’d pay any other bill and you’ll find that your savings account will start to grow incrementally.  Give it a try!
5. Reduce an expense, save it. We could all be a bit more frugal, but this tip is actually savings gold!  Instead of paying the extra $20 a month for the movie channels on cable, cancel it and save that money.  Why pay $4 for a cup of coffee and a bagel when you can get premium roast coffee and bagels at home?  Try finding where you are spending your money, and start to eliminate things.
6. Round up. I got this tip from J.D. Roth of Get Rich Slowly … actually, it’s a strategy used by his wife, who will log every purchase or check she writes into her checkbook or finance software — but rounds up to the nearest dollar. So if she spends $26.01, she enters it as $27. Over the course of a month, this can add up to decent savings.  You can now do this by opening a “keep the change” account at several large banks.
7. Double purpose account. This tip is from Trent of The Simple Dollar, who wanted to pay down his debts but still have the financial security of an emergency fund at the same time. So Trent brilliantly used a double-purpose account: he would save money in an account, and after he reached a certain minimum, anything above that amount was being saved to pay off a specific debt. So let’s say the minimum amount is $500. After you pass $500, the money being saved is for a $200 debt (for example). Once you reach $700 in your savings account, you can pay off the $200 debt completely. Repeat the process for each debt.
8. Tip yourself. Eat out often?  After tipping your server 15-20%, make sure to tip yourself too!  If you “tip” yourself 15-20% of what your bill is when eating out, it serves two purposes — 1) You’ll eat out less often because it becomes more expensive; and 2) You’ll quickly add even more cash to your savings.  It’s a win-win!
9. Keep paying debt, but to yourself. “Oh if I could just pay off my car, my life would be much easier”.  Instead of thinking that way, keep paying the bill amount to your savings account.  It’s a quick way to save by paying money that you are already used to paying.
10. Budget big for groceries, then save the difference. You can do this for anything, but groceries are a good example.  If you normally spend $350 on groceries a month, budget $400 and add the surplus to your savings account.  It’s always better to over budget!
11. Quit smoking or drinking. Neither of these things are good for you, so why not quit and save the money?  If you spend $5 a day smoking, that’s an extra $150 you can add to your savings each month!
12. Limit your access. If you are having trouble keeping your hands off of saved cash, try making it harder to get to.  Open a CD or buy Treasury Bonds.  This money isn’t as easily accessible.
13. Stash a bonus or tax refund. Christmas bonuses and tax refunds make for great kick-starts to your savings account.
14. Save your change. Don’t ever spend your change.  You can get a coin sorter and start rolling your loose change.  This can actually add up to hundreds, even thousands of dollars every year.  How’s that for keeping the change?
15. Save dollar bills. The one dollar bill doesn’t buy much anymore, so let’s start treating it like change, and saving it.  Save your bills in an envelope, and add it to your savings each month.
16. Refinance.  If you can get a lower interest rate, it’s always smart to do so.  Add the extra cash to your savings of course!
17. Sell your car. If you have two cars, see if you can live without one of them. That’s what my wife and I do, and it works out fine, even with six kids. Take the amount you were paying on the second car and save it. Or, alternatively, sell your car and buy a cheaper used model. Save the difference in the payments.
18. Cut out dessert.  Just skipping dessert can save you at ton of money each year.  Not only that but think of the health benefits!
19. Stay in. Most of the stuff you can do going out, you can do at home.  Invite friends over and play a game, or watch a dvd.  Pop your own popcorn, and enjoy a night at home.  Put the savings in your savings account!
20. Freelance. Take your skills and market them as a freelancer, or get a second job on the side. Take the extra income and bank it. This was one of my strategies, and it works great.
21. Save on auto insurance. Most of us not only overpay on insurance, but we have way more insurance than we need.  Some car insurance policies cover damages up to 1 million dollars, or more.  The state minimum is usually 25-50k.  Guess who pays for the extra coverage?  That’s right!