Change up your savings

Up until a few years ago, my caffeine fix ruled my life. Well, maybe not my life, but certainly my wallet. I had to get a cup of coffee going into work and usually picked up a latte leaving the office. If I was having a really bad day, I’d sometimes sneak one in on my break, too. Needless to say, it added up. A typical day was anywhere from $5-7 in coffee costs – roughly the price of an additional lunch.

I’ve cut back significantly since then. I brew my morning cup at home and just once a week I treat myself to a latte at our local café. Even then, it’s not just for the coffee; it’s also a chance to catch up with friends, many of whom are also looking for little ways to save. We’re like a club of reformed spenders finding ways to be frugal.

But last week, one of my friends couldn’t pay for her weekly drink. Thinking she must be completely broke, we all offered to chip in to buy her coffee. After all, there’s nothing wrong with a little indulgence now and then to keep you on track. But she declined our offer, opened up her wallet and showed us a $5 bill, explaining that her new savings plan was to pay for everything in cash and keep all of the fives, eventually depositing them into her savings account. If a $5 bill is all she has left, she pretends she doesn’t have any more money until she goes to the ATM again. She promised she’d buy a coffee next week—if she had different change.

Since my friend doesn’t really have an emergency savings account and her employer had been hinting at layoffs, she made the very smart decision to kick her saving into overdrive. It’s important to have enough money to tide you over for a few months (six months is best, but any amount is better than nothing) if you lose your source of income. What if you lost your job or had an unexpected illness in the family and couldn’t work? What if you car needed major repair? What if you lost your home? It’s not pleasant to think about these things, but being prepared can make them less painful if they do unfortunately occur. If you lose your job, wouldn’t you rather spend your energy trying to find a new job than worrying how you’re going to put food on the table?

There are different methods for saving money. For my friend, it’s by keeping certain bills. For me, it’s by keeping coins. I pay for as much as I can in cash, using bills only, and by the end of the week I empty all of my coins into a jar. Then there’s automatic deposit. If you earn a steady paycheck, you can probably figure out how much you can afford to save each month—10%, for example—and request that your bank automatically transfer that amount from your checking into your savings account. If you can’t save a dime, it means you’re spending more than you earn—and it’s time to make a budget so you can figure out where to make changes (in the meantime, put your credit cards away—paying cash makes it much easier to track, and minimize, purchases).

Keep in mind that a savings method that works for your best friend might not work for you and vice versa. What’s important is that you try different methods until you find one that’s right for you. Of course, in the long run, you’ll want to save money for more than just an emergency. You should also be saving for a comfortable future—for a home if you don’t have one, for retirement, even for fun stuff like vacations. But your priority should be taking care of yourself in the present, which is why having a cushion of cash is so important. Developing a savings plan can be intimidating if you’re accustomed to living paycheck-to-paycheck, or even if you’re a former saver who is now being forced to live on less money. But you don’t have to do it alone. Try out our free debt analysis. In the one-on-one session, an expert debt attorney will go over your finances, answer your questions, and show you how to get your savings in gear. Saving a few bucks here and there might seem like small change, but it’s a big step—and a big investment in your future.

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