3 ways to build an emergency savings

Building an emergency savings is difficult for many people. But if you have a regular income and are willing to take the time to go through your monthly expenses, it’s pretty likely you’ll find ways to contribute to a savings account. Take the following steps to jumpstart your savings plan.

1. Work up a budget–yes, the dreaded “b” word. Look for ways to cut back on spending in different categories, such as entertainment, dining out or hobbies. Just because you cut back now to doesn’t mean you’ll always have to go without.
2. Sell your stuff. As the saying goes, one man’s junk is another man’s treasure. Clear out the clutter and hold a yard sale or place an ad in the local newspaper and on Craigslist. Whatever you make off selling items should go directly into savings account.
3. Put contributions on autopilot. Have a portion of each paycheck automatically deposited into a money market or savings account. It will be be an adjustment at first but over time you won’t even miss the money going into the savings.

Remember, you should put aside at least three to six months of living expenses in your emergency fund. But given that we’re dealing with a tough economy you may want to shoot for nine months of expenses.

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