How I Kickstarted My First Emergency Fund

If your car breaks down or you lose your job tomorrow, do you have anything to fall back on? What if you get sick and can’t work for an extended period of time?

No one wants to think about these unfortunate events, but emergencies happen and this can mean unexpected expenses. If you’re tired of living paycheck to paycheck and ready to become more financially stable, you should build a solid emergency fund.

An emergency fund acts as your first line of defense when you’re faced with unplanned and urgent expenses. Financial experts recommend saving anywhere from three to six months worth of expenses, which can be difficult and take some time. If you’re currently in debt, financial guru Dave Ramsey recommends saving at least $1,000. With that said, more than a quarter of all Americans have no emergency fund and more than half don’t have enough money saved up to cover a $500 expense.

Want to make sure you’re able to pay for your unexpected expenses? Read on to learn more.

The Importance Of Having Emergency Savings During Debt Payoff

When I was waist deep in debt and eager to pay it all off, I knew I needed to build a small emergency fund first. Why? Because if a random expense popped up, I wouldn’t have to incur more debt to pay for it.

An emergency fund also protects your cash flow and allows you to keep making debt payments. This, in turn, helps you work toward your other financial goals.

How much you decide to save is totally up to your needs and preferences. The best thing you can do is break down your big savings goal into bite-sized pieces. For example, I truly wanted a $10,000 emergency fund but decided to challenge myself to save one-quarter of that amount, which still made me feel comfortable during my debt payoff. I achieved this goal.

I established a $2,500 emergency fund during my first year of serious debt repayment. I did this in just four months. How? I did one thing that I recommend you do as well. I started paying myself first.

Start Paying Yourself First

Building an emergency fund fast is no easy feat, but when you commit to paying yourself first, it becomes more manageable. Not only that but you’ll be more likely to get the results you crave. It worked for me and it can work for you too.

The concept of paying yourself first is simple and refers to sending money straight to personal or retirement savings as soon as you get paid. Think about the first thing you do when you receive your paycheck. Do you pay all your bills? Or, do you go out for a nice dinner or buy something you want? You may think that you’re doing these things to take care of yourself, but you’re actually depleting your own funds by trading your money for unnecessary resources and services. Instead, you can keep more of your money in your possession by paying yourself first. After that, you can feed your emergency fund, save for retirement, and contribute to other savings accounts.

Many people claim they don’t have enough money to save and can’t afford to build an emergency fund. When you pay yourself first, however, that excuse goes right out the window because you’re prioritizing your own personal savings over other expenses. Before I started paying myself first, I would spend money on everything under the sun when I got paid. Then I would wonder why I had no money left to set aside in a savings account at the end of the month.

I realized my process was flawed and I would never reach my emergency fund goal this way. Instead, I set up automatic transfers to a high-yield savings account every two weeks on the same day I got paid from my job. Automating essentially meant my money was out of sight, out of mind while I effortlessly grew my account each month.

Next Steps

Once you commit to the idea of paying yourself first to grow your emergency fund, set a clear goal based on your needs. For example, how much do you wish to save and how long do you expect it to take?

Also, make sure you consider lowering your expenses, especially if you’re not used to prioritizing savings. Odds are, you will have to adjust your lifestyle and give up some expenditures in order to save more money. While you’re at it, don’t forget about increasing your income. I got a side hustle to help me build my emergency savings and pay off debt faster.

Commit to YOU

While you’re building your emergency fund and paying off your debt, keep in mind that having extra income won’t solve all your problems. You’ve got to take the first step: pay yourself first.

If you don’t do this, you run the risk of mismanaging the extra money you make, making impulse purchases and inflating your lifestyle. But, if you commit to yourself, you’ll develop a solid emergency fund faster as failure or procrastination isn’t an option.

Are you ready to grow your emergency fund by paying yourself first?

 

How to Budget for Love

I don’t care what hardcore romantics say. You can put a price on love. In fact, with more single people than ever in the U.S., singles are throwing down some serious dough in search of a soulmate — or just a suitable partner.

Let’s look at some numbers, shall we? For starters, dating services alone make up a $3 billion dollar industry. And according to a Match.com survey, the average single person in the U.S. spent $1,596 on dating in 2016.

As it may take you months —  or even years —  to find love, you may want to sock away some funds for dating. Take a look at 4 cost centers to factor into your “love” budget:

1. Dating Site Subscriptions

While there is no shortage of free dating apps — Tinder, Bumble, OkCupid and Plenty of Fish for starters — you might consider signing up for a paid dating site. Those who pay for a dating service tend to be more serious about finding a partner, after all. Prices vary depending on the dating service and subscription you choose. Popular dating site eHarmony, for example, charges $39.95 a month for a three-month subscription. But, if you opt for a six-month subscription, it’s $29.95 a month, which works out to $180 for half a year.

If you have more cash than time to find love, you can link up with one of those elite matchmaking services, such as Kelleher International. These services, which oftentimes include coaching too, can cost anywhere from $5,000 to $50,000 (yes, count those zeros) a year.

2. Dates

Whether you grab drinks at a bar, partake in fancy dinners, or buy tickets to see one of your favorite bands, dates add up quickly. Unsurprisingly, according to the Match.com survey, men spent $1,855 a year on average, compared to $1,423 spent by women on dating. This includes everything from dating subscriptions, new outfits, entrance fees to clubs, and beautifying oneself.

While you can go splitsies, there will still be times when you’ll want to treat your date. And let’s not forget those expensive “let’s kiss and makeup” reconciliation steak dinners out (they do happen).

3. Weekend Getaways

When you’re dating, don’t forget about those impromptu weekend trips. While it depends on what you and your partners want to do, it’s safe to budget $1,000 a year or more on trips with your boo — based on my personal experiences. And, if you are in a long-distance relationship, you’ll need to factor in travel expenses to spend quality time with your significant other.

When I was dating more actively, my partners and I would go on trips at least several times a year. This easily added up to at least a thousand bucks a year in travel, which included long weekend getaways up the California Coast, friends’ weddings, or a short summer stay in other parts of the country. 

4. Special Occasions

According to the National Retail Federation, a person can spend about $136.47 on Valentine’s Day. So, it’s not surprising that you might want to budget for getaways and gifts for occasions like birthdays, holidays, and anniversaries.

Depending on your relationship dynamic, spending money on special occasions can be negotiable. One of my exes and I actually moved our anniversary celebration date so that it wouldn’t bump against a month that was super crowded with birthdays or major money-burning holidays like Christmas. This way we could allocate ample time and money to celebrate our anniversary.

Save for Love to Alleviate Stress

If you’re actively dating or plan to start the process soon, you can start to save up for these expenses by adding a bit of padding to your discretionary spending each month, or, better yet, start earmarking money into a dating fund. The search for romance is rarely easy, and expenses can quickly balloon. However, setting aside some funds for dating will alleviate some of the stress that comes with romantic courtship.

 

How to Start a Side Hustle to Save More Money

For most of us, saving money is hard.

In fact, 69% of Americans have less than $1,000 in savings, according to a survey by GOBankingRates. Saving money can be particularly challenging for millennials who are often saddled with student loan debt and just starting out in their careers. Even if you have a great job, you still might not earn enough money to save for your goals, like buying a house or starting an emergency fund.

So, how can you increase your earnings potential right now so you can save more money? Starting a side business from scratch is one possibility. However, this might not be realistic when you take into account your demanding job and limited funds. But, as the saying goes: Where there’s a will, there’s a way. Actually, there are 5 ways. Read on to learn how you can take advantage of the sharing and gig economies and start saving money right away:

1. Rent out a spare room on Airbnb.

This, of course, means you have a spare room in your apartment or house. If you do, consider fixing it up with some nice yet inexpensive decor (Target to the rescue!) and posting it on Airbnb. If you don’t have a spare room and live with roommates, you can still get creative by staying elsewhere and renting out your own room a few nights a month. I know you might dread this, but staying in your parents’ basement isn’t such a bad idea either if you’re only taking up residence there every other weekend and this translates into a few hundred bucks a month. Not so shabby.

2. Rent your car.

If you have a car and don’t use it much, consider listing it on Turo. According to Turo, if your car is worth $20,000 and you rent it out via the platform 15 days a month, you could earn $6,501 a year.

3. Hang out with four-legged friends.

If you’ve considered starting a dog walking business but you don’t have the time to market yourself, Rover and Dogvacay might offer the perfect solutions. These two apps allow you to list your hours of availability, set your rates and voila! – you’re in business. If you live in a dog-friendly house or apartment, you can even host dogs when their owners are on vacation and start your own hotel for dogs.

4. You’re in the driver’s seat.

Yup, driving for ridesharing services is an easy way to make some extra cash. Some good options: Uber, Lyft or Safr, which recently launched in Boston. Redefining ridesharing for women, Safr aims to provide safe transportation and job opportunities for women. According to the Safr website, it also pays more than other driving apps. If you don’t want to drive people around, what about food? More than 100,000 people are already signed up on Postmates to deliver – among other things – take-out meals from local restaurants to hungry patrons. According to Postmates, drivers can earn more than $25 an hour and set their own schedules.

5. Turn your skills and talents into fast cash.

If you enjoy doing household tasks and consider yourself a jack of all trades, you might consider signing on to TaskRabbit to offer house cleaning, furniture assembly, handyman or other services. You set your rates and choose to work hours that fit your schedule. As another option: If you do a bit of research, you might find a specialty app that will help you score side gigs. For example, I teach yoga and recently signed up for a new app called EasyPose. I entered in the types of yoga I teach and my availability. Students use the app to hire instructors who will come to their homes to teach private yoga sessions. Within a day, I had my first client.

As you can see, if you want to earn extra money to jumpstart your savings, you’ve got plenty of options. Yet, regardless of what type of gig works best for you, it’s important to keep your eye on your savings goals. To do this, it’s a good idea to stash away all of your earnings from your new side hustle into a savings account. Think of it this way: If you were able to get by on your full-time income before, anything extra is gravy.

If you find it hard to resist the temptation to spend your newfound income, here’s another tip: Automate your savings. Automating makes it easy for you to save without thinking about it. For example, with a Chime account, you’ll save money every time you use your Chime Visa Debit card to make a purchase. That’s right. When you use your card, your transaction will be rounded up to the nearest dollar and that rounded up amount will be transferred into your savings account. If you use your debit card twice a day on average, you’ll save about $400 a year.

Between automating and earning more money with a new side gig, your savings goals are now within reach. Are you ready to start manifesting more money today?

 

Introducing “Save When I Get Paid.” The Easy Way to Pay Yourself First.

How much did you save from your last paycheck? If your answer is “I don’t know,” or “not much”, you’re not alone. Saving money is just plain hard. It requires us to make complicated decisions such as how much do I save and when. It’s no wonder many of us end up doing nothing, and it’s why personal finance experts recommend automating your savings plan.

Introducing “Save When I Get Paid.”

Our “Save When I Spend” automatic savings program has already saved Chime Members millions of dollars with Round-Ups on purchases and now Chime members have another way to automate their savings. Our new “Save When I Get Paid” feature helps members save even more money without having to think about it. When you enroll in this feature, you’ll set aside a portion of your paycheck as soon as you receive it.

It turns out this “pay yourself first” approach works! Members who tested Save When I Get Paid in beta have already seen a big jump in savings. In fact, members enrolled in the new program saved $217/month on average– almost double what others saved.

This new feature builds on our “Save When I Spend” Round Up program that helps members save automatically every time they use their Chime card to pay a bill or make a purchase. Members enrolled in both Save When I Spend and Save When I Get Paid saved $382/month on average or more than 3x compared those not enrolled.

How to Start Automating Your Savings Today in 3 Steps

1) If you haven’t already, sign-up for Chime and you can start saving money automatically!

2) Enroll in the “Save When I Spend” Round Up program and every time you pay a bill or make a purchase with your Chime card, we round up the transaction amount to the nearest dollar and transfer the round-up from your Spending account into your Chime Savings account.

3) Set-up direct deposit by providing your employer with your Chime account number and bank routing number. You can find this information in the Chime mobile app by tapping Move Money. Then tap on the gear icon in the mobile app to go to Settings where you can enable Save When I Get Paid. Once enabled, 10% of every paycheck will be automatically deposited into your Chime Savings Account.

Try it out today, and let us know what you think! We’ve gotten some great suggestions so far, and we’re considering updates to the feature such as allowing members to choose the percentage of each paycheck. Stay tuned for more ways to save!

 

How Big Banks Make Money and Why It’s Costing You

The nature of numbers is strange. Make them too big (e.g. Americans paid $33 billion in overdraft fees last year) and they’re hard to wrap your head around. Say “nickel & dime”, on the other hand, and the phrase is quaint but lacks impact. Nickels and dimes are the loose change that rattles annoyingly in the bottom of a purse or pocket.

The truth is, the nickel and diming of Americans in the form of bank fees has hit epidemic proportions. It’s hurting people at a surprisingly wide range of income levels, yet it often goes unnoticed.

On average, American households are now paying close to $300 in fees annually. Given many people have less than $500 in savings (6 in 10 Americans), the bank fee epidemic is especially painful and detrimental to consumers’ financial well-being.

The question is, why do banks need to charge so much in fees? Part of it has to do with the overhead cost of bank branches. Today, most people opt for the ease and simplicity of mobile and online banking services rather than walking down the street to a local bank branch. However, even if you rarely set foot in a local branch (like most millennials), you and millions of Americans are still paying for them in the form of bank fees.

But overhead is just one part of the story. Over the last few decades, consumer banking has dramatically evolved to become less consumer friendly. Back in the day, many banks were small local businesses that primarily made money from interest on loans. Thanks to deregulation, today those small local banks have mostly gone by the wayside or merged into what has become a small set of “big banking” mega-corporations that offer an incredibly diverse set of financial products services.

As banks have evolved and grown, the culture of banking has changed from that of a friendly neighborhood small business serving its local community to a faceless corporation that’s far removed from the customers they serve. In this evolution, banks found new ways to charge fees by offering services like overdraft “protection” that in reality mean profiting from people’s confusion, misfortune, and mistakes. As Lisa Servon describes in her book The Unbanking of America, “banking became about tricking people and figuring out how to manipulate and deceive them.”

Big banks’ fees on the rise

Last year banks made 33 billion dollars in overdraft fees alone. Most big banks charge a whole host of fees to cash in on their customers including maintenance fees, transfer fees, international transaction fees, service fees, and minimum balance fees to name a few.

When we choose a bank, we put a significant amount of trust into an institution. We expect them to look out for our money and best interests should anything go wrong. Unfortunately, this is not the case with many financial institutions, who’ve literally made billions by profiting from their customer’s misfortune, confusion, or mistakes. Most banks actually profit off of people’s mistakes by charging for situations such as an accidental overdraft on an account. To make matters worse, most people who got hit with an overdraft fee didn’t even know they were enrolled in so-called overdraft “protection” and would have preferred to have their transaction declined.

Bank fees are so common that many Americans are conditioned to them as the norm or they live in blissful ignorance about how much they’re actually paying.

A recent report found that most Americans are simply unaware of how much bank fees cost them each year. While less than half of respondents said they believe they are aware of every fee their bank charges, 78% of said they haven’t read their bank account terms and conditions. It’s easy to understand why this is the case given most terms and conditions are written in confusing legal language.That leaves consumers in the dark about potential fees on the account and how much they may cost.

Bank fees to keep an eye on

The two most common fees that people get hit with are an overdraft and insufficient fund fees. In a study of two million checking accounts where people had opted into overdraft protection, the average monthly fees paid was $21.61. That certainly stings considering 52% of people don’t remember opting into overdraft protection and it’s associated fees.

Let’s focus on overdraft fees for a moment, because they’re especially brutal. Most large U.S. banks charge between $35 and $38 per overdraft. A study by Pew Charitable Trust determined that frequent over-drafters have forfeited the equivalent to an entire paycheck due to overdraft fees.

To twist the knife, many big banks have specific ways of processing transactions that can count further against you. They process orders from the largest dollar amount to smallest, rather than in the chronological order they happened in. For example, say you spent $30 on lunch and $80 on dinner in one day, but only had $75 in your account. If your bank processes in chronological order, you’ll only be hit with one overdraft fee. If your bank processes from the largest dollar amount to smallest dollar amount, you’ll be hit with two overdraft fees. It’s a sneaky way to make more money off each customer through overdraft fees.

Big banks use fees to maximize the profit they make off individuals. You can see that by how they slap fees onto many of their services. Some of the most common fees you’ll encounter are:

  • Early account closure fees – closing an account before a set period of time
  • Foreign transaction fees – fees for spending money outside of your country
  • ATM fees – fees for using an ATM not associated with your bank
  • Overdraft fees – fees for overdrafting on your account
  • Maintenance fees – monthly fee for maintaining an account
  • Minimum balance fees – fees for not maintaining a minimum amount in your accounts (both checking and savings accounts may have this fee)
  • Service fees – fees for meeting with a teller instead of using free online services
  • Transfer fees  – fees both for sending outgoing wires and for receiving incoming ones

How to avoid bank fees

If you’re looking to avoid paying fees to your bank (and you should be), there are some easy ways to keep more money in your pocket and out of theirs.

Find out how much you have already paid in fees

One of the best places to start is to review your account history to understand just how much your bank has charged you already. Check out Bank Fee Finder, a free reporting service that empowers U.S. consumers to uncover how much they’re paying in hidden bank fees with their current bank. It lets you connect to your bank account and generate a personalized report that identifies fees paid broken down by ATM, overdraft, and monthly fees. The tool supports 17,000 banks in the U.S. and the site is protected by bank-level security including 128-bit encryption and read-only data to ensure the privacy and security of your data. You might be surprised to find out how much you’re paying.

Carefully review your terms and conditions

Once you understand how much you’ve paid in fees, make sure you also understand your bank account’s terms and conditions. It won’t be the most fun you ever have, but carefully reading through the nitty-gritty of your bank agreement can save you a lot of money in the long run. Banks bet on the fact that you’re not going read through the agreements. Fee schedules and terms may be buried in fine print or confusingly worded. When in doubt, contact your bank and ask them to explain all of the potential fees associated with your account.

Negotiate with your bank

You may be able to negotiate or opt in or out of fees. The only way you’ll know this is by doing your homework. Big banks aren’t going to tell you how to save money on their fees, so it’s best to come armed with all of the information so that you can make your case. Keep your goal in mind (get your fee erased) and do not make it easy for banks to say no. If you’ve been a loyal customer, be sure to point that out and remind the bank’s representative that your business can be taken elsewhere.

Consider the switch

The good news is that you do not have to pay bank fees! There are many banking options available today such as some credit unions and online banks like Chime that do not charge you unnecessary fees. Big banks rely on the fact that people would rather just pay their fees than go through the trouble of switching banks. The truth of it is, switching banks isn’t that hard to do and starts with closing your bank account and opting for a better one. It really only takes about six steps and it’s a lot less painful than forking over hundreds in fees each year unnecessarily