Six Ways to Save

These tips will help you build a cash cushion in no time

The question “Do you want to go to credit card hell?” lingered in Shaneyqwua Jarrett’s mind for years after her father posed it when she was bombarded with credit card applications in college. Jarrett’s parents had always paid for everything in cash and taught her to pay for large purchases in full.

After college, the 29-year-old insurance adjuster spent one year in the military and had no living expenses. She then lived at home with her family for one year. Jarrett also created a budget and faithfully saved a set amount each week. Over four years, she was able to amass a $36,000 emergency fund.

Whether you need a professional financial plan or just a “Savings 101” refresher, these six tips will get you started on the road to building a cash cushion:

Have a plan. Decide how much you’re going to save and when. “People who have a plan save twice as much as those who don’t,” says Nancy Register, director of America Saves, a campaign to assist individuals and families with building wealth. “Not only do they save more, but they save more consistently.”

Devise a budget. “People should run their financial affairs just like a business,” says Marilyn Logan, author of I Can’t Afford to Marry You: A Guide to Understanding the True Cost of Love (Salo Publishing; $20). “It is important for a firm to keep its financial books in order. The same goes for your household. Know how much income you have on a monthly basis and track how much you spend—from groceries to church tithes.”

Treat savings like a bill. “Pay yourself first by putting money aside each month, especially now during turbulent times,” suggests Suzanne Mayo, director of Black America Saves, a national social marketing campaign under the America Saves umbrella that encourages African Americans to save, reduce debt, and build wealth. You may also consider having a certain amount automatically deducted from your paycheck. Establishing saving habits early on prevents unexpected expenses from becoming crisis situations, Register adds.

Make sure your money is not easily accessible. Mayo recommends opening up a special emergency bank account. A money-market account without ATM access is best. That way, if you want to access your money, you’ll have to transfer funds into your checking account, which often takes two business days. This gives you time to think about whether you really need the cash or if you’re just spending on a whim.

Put the credit cards away. Using cash instead of credit forces you to “respect your money,” Logan says. Additionally, it is important to research the terms on your existing credit card agreements, particularly in light of the current economic climate, where original credit terms and agreements may have shifted. “Many credit card companies are lowering your limits, so call and find out what it is,” Logan says.

Get a second job.  Another way to save successfully is by getting a side job. “Getting a second job may be the easiest way to get to your goal,” Mayo says. “Over time, the side job will not only allow you to do what you like doing, but it can also be your source of savings.”

This article originally appeared in the February 2009 issue of Black Enterprise.

ACROSS THE WEB
  • Suzette

    Keesa,
    Those are some helpful tips regarding saving money especially paying yourself first. Paying yourself first has always been one of my mottos as well as giving God his tithes. But I have found it difficult to maintain due to the economy. Any suggestions?

  • Kimberly Kent

    God has many ways of blessing us. Tithing keeps the windows of heaven open to us. Continue to put God first and your personal economy will always be ahead of the world’s economy. Obedience is still better than sacrifice.

  • http://yahoo Carolyn

    great tips, I use to do good at paying myself first when I was working I got sick and had to go on disability. getting a check once a month got pretty hard. I needed braces and didn’t have the money and had plenty of doctor bills so I had to use my credit cards. know I am trying to get back out of debt. I try to pay extra every monyh, but the credit card companies keep sneaking my intrest rate up and lowering my balances. please tell me how to get out of this bind.

    • Deb

      Transfer your balances to a credit card with lower interest rates. (This is usually for a period of time ) Take out a personal loan with a fixed interest rate. The interest is usually added into the loan but you will not have to worry about rising interest rates and the interest rate is much lower than the interest rate on credit cards.. If you have good credit you can negotiate the interest rate some.

  • Pingback: Economista: The Poor Man’s Savings Club - BLACK ENTERPRISE

  • Pingback: Save More of Your Money! | AfroBuzz Central