5/12/15

-Creating a cash buffer_

Everyone needs a cash buffer, also known as an emergency fund. But it can be difficult to have one when you are living paycheck to paycheck. Start small. Put $10 or $20 into a savings account that you don't touch. If your paychecks are direct deposited you can, usually, specify what accounts it goes into. If you can, put it so $10-$20, whatever you can afford, to go directly to the savings and you won't even see it. If you don't know it is there it is harder to get tempted to spend it on none emergency things It will build up slowly, but it will.
Emergencies can include car repairs, medical bills, veterinarian bills. Emergencies do NOT include wanting a new outfit for a party. Or wanting to get away. Be honest with yourself and save the money. How about you set a goal? Say have at least $1000 in the account and when you get above that, spend what is over that $1000? Just don't make a habit of it. Saving $1000 is a great thing but saving more can't hurt and it might be better.
Another way I have a buffer is that I have a gift card from my grocery store that is reloadable. I put $10 on it every grocery trip. I put money on the gift card every time I  can, for when I need food and have no money I can use the card. I have a better paying job now than when I started doing this so I usually let it get up to $50 and then donate the card to someone who needs it more than me. I have a few friends who are having tough times.
One way to "find" the money for it is to not grocery shop except for the bare essentials, every week and use that money for your cash buffer. I know that I have way too much food at my house. I could probably not grocery shop for a month. I don't want to try to go without grocery shopping for a month but I am working really hard now to use up all my food before I go shopping for dinners, our main meal, again. I went yesterday and got produce and non food stuff we needed and saved a bunch of money.
Going hand in hand is a sink fund. You sink money into a fund for the bills that are just a few times a year, like car insurance and car registration and the like. Take the total of those bills for a year, divide by 12 and you put that much into an account. Then when it comes due, you have it and you don't have to scramble for it.
It isn't always easy to do this but it is better than being without the payment. One could use a tax return to put into savings for this purpose. Not as fun as blowing it but much smarter. Better yet, redo your deductions and not get a refund next year. Re doing your deductions means you get more money in your paycheck but you need to be disciplined and save it each paycheck so you won't have to owe it to Uncle Sam.