Emergencies happen, and as a nation we aren't saving enough for them. According to the Federal Reserve, 46 percent of Americans wouldn't be able to deal with an unexpected $400 expense without borrowing money or selling something.
Some personal finance experts suggest having three to six months' worth of living expenses in the bank; others say it should be a 12-month fund. Yet even an emergency fund (EF) as small as $500 can make a difference for sudden expenses like car repairs or a vet bill. It might not cover every circumstance, but it sure cuts down on the amount you put on a credit card. Aim for $500, but don't stop there. That three-, six- or 12-month fund will happen if you keep at it.
This doesn't have to be onerous! The following “stealth savings" tactics are pain-free ways to build an EF and create more security for your growing family.
While you're expecting
Sure, you want to buy all the baby things, and also treat yourself to dinners out and weekends away while you still can. That's totally valid. But think big-picture as well, with help from these simple habits:
- Save your coins. Easiest stealth savings tactic ever! Just empty your coins into a jar or piggy bank each evening. Every now and then, sort and deposit the money. It really does add up.
- Automate savings. Have the bank or credit union divert a small percentage of each paycheck into your EF. You'll learn to live on what's left.
- Get symbolic. Change the password on your favorite shopping websites to reflect your child's due date (e.g., “081918"). Every time you sign on to browse, typing in that date reminds you of the reason you're saving. Now: Transfer the amount you almost spent into your emergency fund.
- Get symbolic, part 2. Change your debit card PIN to your child's due date. That subtle (and exciting!) reminder could help you not ask for cash-back at the supermarket checkout, or keep you from adding baked goods to your coffee order. Again, transfer the amount you didn't spend to your EF.
- Download an app that allows you to tip yourself. Look for an app that lets you turn impulse spending into impulse saving. Say you're soooo tempted by that adorable little outfit but ultimately decide, “No, we have enough onesies." Use the app to move what you would have spent into your virtual tip jar (an online bank account). Just check the reviews and the developer's reputation since this app will connect to bank accounts.
- Save baby's age. For the first year, transfer the equivalent of $1 per week into your EF (all at once, or a deposit every few months). The second year, make it $2 a week. This is an easy way to save because the amount rises so gradually. But it adds up pretty fast; by the time your child hits first grade you'll have stashed $1,092!
- Pay yourself to do laundry. Each time you do a load of wash - and there WILL be laundry! - put $1 or $2 in a jar. Bank the result every four or five months.
- Quit it! You want to be healthy for your new little one, right? Now is the time to stop smoking, drinking all that soda or whatever your particular vice happens to be. Calculate what you're saving and send those dollars to your EF.
- Save your raise/bonus. If you're lucky enough to get a bump in pay, add that amount to your regular automated withdrawal. And if you were blessed with a bonus, take the advice of personal finance writer Liz Weston: Spend 10 percent of it on something you want, and put the rest into your emergency fund.
- Save your singles. Every night, have your preschooler take all the one-dollar bills from your wallet and put them in a jar. Once a month, deposit the cash into your EF account. A variation on this is the...
- Random Number Challenge. Ask your child to pick a number between 0 and 9. Next, let him or her check the serial numbers on the bills in your wallet. Any dollar bill that ends in the chosen number goes into the fund.
- Weekly Challenge. The first week of the month, put $1 into an envelope or jar. The second week, put in $2. And so on and so on. Each month you'll be banking $10 to $15. Deputize your son or daughter to remind you to do this.
- Found-Coin Challenge. Kids are closer to the ground than we are, so they're more likely to see the dime on the sidewalk or the quarter in the vending machine return slot. Save all such gleanings for a year, then use this as an object lesson of how small coins can add up to respectable money. (Pro tip: Those change counting machines at the supermarket are a good place to look.)
- Save your savings. Any time you use a coupon or get a price break from a customer loyalty card, have your child look for the “You saved X dollars today" message on the store receipt. Transfer that amount into savings, or put it into a jar to be banked later. A bonus benefit: Your child learns about money and how to be a savvy consumer.
- Brown bag challenge. Bringing your lunch from home even three times a week can mean big savings. Calculate what you would have spent on lunch out and save those dollars.
- Snack Time Challenge If you hit the workplace vending machines a few times a week, you're likely dropping at least $20 a month. Watch for loss-leader drinks and snacks and keep them in your desk, locker or bag. Bank your savings.
- Go green, get paid. In some regions you can get a nickel or a dime for returning cans and bottles to a recycling center; in other places you get paid a per-pound price for aluminum only. Get the kids involved: They can join you in rinsing and organizing recyclables that the family produces, and maybe in picking up bottles and cans on family walks. The money earned goes into the fund.
- Stash your rewards. If you're using credit to pay for some of the above expenses, make sure it's a rewards card. Specifically, get a card that offers cash-back as an option - and send those dollars to the fund.
- Take surveys. Since parenting a tween or teen means a lot of hurry-up-and-wait at karate class, dental appointments and extracurricular activities, why not do surveys on your smartphone while you're sitting there? Join a reputable survey company like Pinecone Research, Toluna, Harris Polls and ZoomPanel and earn from $1 to $20 per survey, depending on the topic and complexity. Some are actually online focus groups and can pay $50 or more.
- Tuck away that FSA. Got a flexible spending account for co-pays, deductibles and other medical costs? Try to put at least 5 percent of each reimbursement into your EF.
- The Pantry Challenge. So the cupboard looks a little bare the day before your weekly supermarket stock-up. Don't order takeout! Instead, get creative about eating from whatever's on hand, whether that's PBJs and canned peaches or “hey, everybody, pancakes for dinner!" Dinners may be unusual- but you can stash the cash you would otherwise have spent on Thai food or pizza.
- Steal from yourself. So your checking account has $197 in it the day before payday. Siphon a percentage of it into the fund.
- Save it forward. So you finally paid off your car, or recently made the last-ever payment to your youngest child's college expenses. Congratulations! Now: Keep paying, by transferring a percentage of that payment into your EF every month.
- Do in-person surveys. Opportunities vary widely: trying new foods, serving on mock juries, previewing programs or commercials, testing products and doing general consumer research. These jobs can pay anywhere from $50 to $200. Two ways to find them: ConsumerOpinionServices.com and FocusGroup.com.
- Meatless Mondays. Or Tuesdays. Or Fridays. At least one day a week, go vegetarian. Bank the amount you would otherwise have spent on pork chops or boneless chicken breast.
- Dare-You Challenge. If you've got a relative or friend who also needs to bump up the savings, try this: “I dare you to try and save more than me in the next three months. If I win, you have to detail my car (or whatever); if you win, I have to clean out your garage (or whatever)." Game on! Bonus: No matter who ends up with more cash, you both win.
The first year
Don't be surprised if your budget springs some money leaks. You may find yourself eating lots more takeout and paying through the nose for things you never even heard of before (breast shields? sippy-cup leash? applesauce in a tube?). That's why these hacks are super-easy:
Beth Kobliner, author of “Make Your Kid A Money Genius (Even If You're Not)," believes financial smarts can be taught early. Citing a University of Wisconsin study, Kobliner notes that a typical three-year-old can understand the basics of value and exchange, delayed gratification and making choices. Our toddlers are “eager, and able, to understand a lot," she says. So teach them, with the following tactics:
Elementary school years
Family life picks up speed as you juggle PTA meetings, ballet class, play dates, sports leagues and party invitations. The cost of family life rises, too, as you're now buying birthday presents for your kid's friends and providing snacks after soccer practice. Keep chipping away at your emergency savings fund, though. Bring your children in on the action, too. Describe it as a “thinking ahead" fund: You have life insurance, just in case, and you also set aside money to deal with the unexpected.
Tweens and teens
Family life is now about as expensive as it gets. Money drains pop up daily: orthodontics, sleepaway camp, team physicals, new shoes again, acne treatment refills, lost contact lenses, regional sports tournaments, driver's school, prom tickets, college application fees and, ultimately, tuition. Saving might feel tough, but try these workarounds:
Empty nestersMaybe you saved less than you'd have liked in the past decade because the kids were in college. You might even still be helping your grown offspring from time to time. Or perhaps you want to spread your own wings now that the fledglings have flown the coop. Before you book that 30-day cruise, shore up your EF. The older your home gets, the more likely that something expensive (roof issues, tree roots in the sewer line) will pop up. Be ready, with tactics like: