PocketCoinage

The emergency fund is probably the most important savings account.  Think of it as self-insurance.  You save for an unforeseeable event: loss of income, furnace goes, or the roof springs a leak.  So how much do you need to keep in an emergency fund?  It all depends on your comfort level and what you are saving for.  You may even want to have different, targeted, emergency funds.  Some people recommend saving for at least 6 months of expenses.  Personally, with everything going on in the world, I would save for at least 12 months of expenses.  This will give you some flexible time to look for another income.

My current emergency fund is for anything at this point in my life.  Once I reach my ultimate goal of $20,000, I will set this account aside and name it the “Loss of Income Fund”.  The $20,000 will keep my current lifestyle afloat for about a year.  I may even open short-term CDs to make some more money rather than letting it sit at a lower interest rate.  To keep my savings on track, I could direct the money a few ways:

• Keep putting money into the “Loss of Income Fund” after I reach my goal
  • Every $1,000 I go over my goal, a 1-year CD gets opened
• Create a new emergency fund targeted towards another goal
  • Maybe an “Emergency Home Repair Fund”?
• Send it to another savings account for non-emergencies
  • Vacation fund
  • Auto fund
• Save more towards my Roth IRA

I also use my emergency fund for when I overspend on my credit card the previous month.  I refuse to maintain a balance on my credit card unless I have no other choice.  Most of the items are unforeseen expenses and this is where it is very nice to have a fund to tap into.

Do you have an emergency fund?  How do you use it?

Automating your life can make things a lot easier.  A great example is the morning coffee.  You prepare it the night before and set a timer.  By the time you awake, the coffee has already brewed and is ready for your enjoyment.

The same thing can be said for savings; set it up and enjoy!  Automating your savings can get you on the right path to retirement, vacation, college, emergency fund, or whatever you have your mind set on.

Automation Through Your Employer

Probably the best way to automate your savings is through your employer.  Like most companies out there, they probably offer direct deposit into a checking account.  If you talk with them, they may be able to divide up your pay into multiple accounts by a fixed amount or a percentage of your salary.  By doing this, you can put away regularly without thinking about it or “seeing it” in your check.

Automation With Your Bank

You can also automate transfers with your bank.  My bank, ING Direct, has the option of automating a transfer from a checking account to a savings account.  This is another great way to save money without thinking about it.  It’s also an alternative if your employer does not offer the ability to send your pay to multiple accounts.  It also gives you a little more control over your money.  For example, you can login and change the amount at anytime.  With your employer, this change could take a few pay periods to kick in.  Plus, you may get a regular check instead of a direct deposit while the changes are processed – this is a huge inconvenience for me.

The only downfall to the automatic transfer with your bank is the risk of inadequate funding.  For example, my employer normally deposits on every other Thursday.  If a holiday falls on a Monday of that pay period, the deposit does not get made until Friday.  If I do not time the transfers accordingly, I could end up incurring non-sufficient funds (NSF) fee with my bank. This is something I avoid doing like the plague!

What I Do

Personally, I only automate 403b transfers direct from my employer.  Every pay period I sit down and transfer the money where it needs to go.  This gives me a better understanding of my money and where it goes.

However, I feel the best way to automate would be to have your employer make the deposit for you.  This way you avoid the NSF fee and you don’t “see” the money.  By having my employer deduct my 403b, I do not “see” how large my check would be.  Over the course of two years, I have a decent amount put away for retirement and I do not miss it in my check!

If I decide to automate my savings, I will allow my employer to make the transfer over my bank’s automatic transfer.

Do you automate your savings?

A few weeks ago I wrote about if the Sam’s Club Advantage Plus membership is worth it.  To recap, a plus account adds “eValues”, which are digital coupons, to your account.  You log into your Sam’s Club account online (or at an in-store kiosk) to see what’s available.  From there, you are able to email or print the items on the list.  All you need to do is buy the items and the discounts appear at the register.  According to Sam’s Club eValue FAQs, “eValues means $300 in guaranteed savings. With eValues, you have the opportunity to save an additional $200 a year on top of the savings you already enjoy.”

Checking back on the eValues page, I now have $378 in “savings”.  Unlike last month, I am noticing a few useful items that I would actually buy.  This would include $2 off paper towels and $3 off toiletry products; none of which I would have bought during my next trip.

I guess a $5 savings is a start.  I only $15 more in eValues to go before I recoup my costs and two more months until I renew my membership.  Will I choose the Advantage Plus membership again?  If the eValues do not become more relevant to my shopping; probably not.

Here’s a PDF of the eValues page.  Keep in mind, a lot of the items listed have restrictions such as “you may choose 1 of the following 5 eValues”.  An example of this would be the Pampers Cruisers diapers.  You can choose sizes 1-6 and save $3 on any one.  However, you cannot buy size 5 and 6 and expect to save $6.

I will be posting another update after I obtain some more eValues.  Have you found savings with Sam’s Club eValues?