One great thing about credit cards is that you can use when your car breaks down on the highway and you need a tow and there’s not enough cash in your wallet or an ATM nearby.
If you have that cash in savings, you’d immediately pay your card and you’ll have no interest to pay. The problem is when you don’t have the savings and that emergency is growing on your credit card.
Start an Emergency Fund Quickly
A first goal is to save enough to cover monthly bills, then your next goal might be 2-3 months. Have a portion of your paycheck transferred to a high interest savings account. Start small, like 5% of your income, and automate your money to transfer to high yields savings. You’ll be surprised how you won’t notice the little decrease in spending money. If you get comfortable, you can increase the amount.
Whenever you purchase groceries with a coupon, deposit your savings into the bank.
Tutor a young student in a subject you know.
Reuse any items you can rather than buying new, and pocket the difference in your emergency fund.
Shop around for a new insurance provider.
While paying attention to small, repetitive expenses, don’t ignore larger decisions like your car, house, and wedding. With smart choices on big-ticket items, you could fully fund an emergency account with the savings.
It doesn’t have to be difficult to save some money. You just have to be creative and motivated to make it happen.
Why We Use ING Direct for Our Emergency Fund
We’ve been with them for years and love it their checking and savings accounts. They have all the major features we’re looking for with a bank:
Covered by FDIC
No monthly maintenance fee
$0 required minimum balance
Free online BillPay service
Conveniently located ATMs
Earn some interest rate if possible
While they don’t have the highest rates, they’re still competitive and their customer service has been great for the few occasions we’ve had to use them.
Thoughts on Starting an Emergency Fund
Have you had to adjust and move away from credit cards to a proper emergency fund? How have you been able to work as a couple and build your emergency fund?
The military’s a special way of life. There are unique circumstances that the civilian world doesn’t deal with, like deploying and temporary duty.
Sometimes those situations can make it difficult to keep your financial life on track. But, there are some perks to serving in the military that can help get you to where you want to be with money.
Here are 5 financial tips for military couples.
Get It For Free
Use all the free resources available to you. Things like getting your wills and powers of attorney through legal services at no cost.
Use the free tax services on military installations, Military OneSource, or TurboTax. There are even free concert and event tickets for military Servicemembers and veterans at VetTix.
By taking advantage of these opportunities, it enables you to keep your costs low or use the money in other areas of your budget.
Use The Thrift Savings Plan (TSP)
Saving for your future self should be a priority. A way to do this is to take advantage of the TSP, the government’s version of a 401k.
It’s a great way to invest and save for retirement. A TSP account is set-up through the military’s MyPay (their payroll). An important note: once you elect to start the TSP, a password is mailed to your address.
Make sure your address is up-to-date with your branch of service, or you won’t be able to log into your account at TSP.gov.
Take Advantage Of The Savings Deposit Program (SDP)
The SDP is only available during deployments to combat zones, but it’s an opportunity you’ll want to take advantage of if you’re eligible.
This program allows you to deposit a total of $10,000 into a savings account that will earn 10% interest (compounded quarterly.)
The SDP is a chance to get ahead by making money on your savings—with no risk.
Make A Budget
Creating a budget is the basis for good money management—it helps keep your spending on track. A budget shows all the funds you have coming in and going out each month.
When couples take the time to make a budget, it will make handling money easier. Budgeting keeps your finances organized and make sure you’re both are on the same page on how you’ll spend money.
Have An Emergency Fund
Let’s be honest—transition’s a major aspect of military life. There’s the moving, deployments, marriage, babies, and training to name some.
These changes can cause unexpected financial events. An emergency fund helps protect from these potential money problems. A fund for emergencies is 3-6 months of your living expenses.
Money set aside for the potential problems life throws at you, is like having your own insurance policy.
Lacey Langford, AFC® is a personal finance blogger, speaker, and money-life coach. Langford blogs at LaceyLangford.com where she shares her passion and insights on all things personal finance.
She is the founder of Sage Services, LLC a boutique money-life coaching business specializing in the unique financial world of the military. She helps others create the money life they need and want. Check her out on Snapchat: FinanceLacey.