Having a financial cushion is one of the most important things you can do to feel financially secure. Here are some ideas that may help:
Contribute to your retirement plan at work
Many companies offer employees the opportunity to defer income into a 401(k) plan and will also help with a matching contribution of some level.
Create your own automatic savings plan with online banking
Generally, savings accounts pay higher interest rates than checking accounts. So it makes sense to transfer a set amount into your savings account from your checking account each month. Soon you'll come to view that amount as a regular expense and may not even notice it's gone from your checking account.
Reduce high-interest-rate debt
If you're paying interest on credit cards or some other loan that has a high interest rate, find a way to pay it off. Interest rates in the teens make it hard to get ahead of the minimum monthly payment required. You might also consider finding another credit card with a lower interest rate.
Skip a year's vacation
As much as you may look forward to an incredible trip, consider staying home or visiting nearby relatives.
Reduce your living expenses
Take a look at how you spend money—where can you save? Maybe bring your coffee and lunch to work rather than go out, or watch movies at home, not the theater. Also consider your monthly expenses. Shop for a cheaper cell phone plan, as well as auto and home insurance. Reduce or even get rid of cable TV. You'll be surprised how small changes can add up.
Saving money requires self-discipline. It may be hard, but having a savings cushion can provide financial peace of mind and a source of funds if you need them.
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Branch Banking and Trust Company, Member FDIC.