Don’t Have Any Money Saved Up? Start Small and Make Saving Automatic

Create an Emergency Fund With Baby Steps

It probably doesn’t come as much of a surprise that not having enough money saved up can pose a financial problem. We all know that saving money is important, but when times are tough and money is tight it feels like an impossible task. But the risk of not having any savings, or very little savings outweighs any potential cash flow problems you’re facing.

Unexpected things happen all the time and it is part of life. Whether it is a loss of income, a natural disaster, accident, unexpected sickness or even an unexpected child there are many events out there that could impact you with little or no warning. We hear stories in the media all the time about people suffering from one thing or another and it is easy to conclude that it won’t happen to you, but this is a big mistake.

Clearly, having absolutely no savings at all can pose a problem in a financial emergency.  But what if you currently do have some savings, is it enough? There are many different rules of thumb on this. Some say you need at least three months of expenses saved up, others say six, while even others recommend a full year. There isn’t a right or wrong answer and it ultimately depends on your personal situation. Obviously, the more savings you have the better, but this is not an easy thing to achieve and generally doesn’t happen overnight.

Getting Started

Perhaps the most difficult aspect of saving money is actually taking that first step. If you don’t have much saved it’s probably because money is tight, so the thought of putting money aside when there are other bills to pay may be quite stressful. If you don’t have one already, you first need to open a savings account. This could be through your local bank or credit union or through one of the online savings options such as FNBO Direct. The great thing about online savings accounts is that you typically get better interest rates than what your local bank is offering. If you’re going to save money, you might as well put your money to work for you!

Next, you need to determine the frequency and amount of money to save. If saving isn’t an automatic process you will probably end up unable to keep your commitment to save. For starters, you should determine how frequently you want money to be deposited into your savings account. The more frequent the deposit, the less you will feel it since you will be depositing smaller amounts are regular intervals. If you are paid weekly, great. Set your direct deposit with your employer to deposit part of your paycheck into the savings each week. If you don’t have direct deposit or don’t want to fuss with changing it you can do the same thing with automatic transfers from your checking account. Each payday simply schedule an automatic transfer into your savings. If you are paid bi-weekly you can follow the same steps. Coordinating deposits with pay will lessen the impact of that money leaving your account.

One of the difficult things to consider when establishing a savings plan is determining how much to save. When you look at the dollar amount required to cover a few months worth of expenses it can be very discouraging. The key is to not to look at the ultimate dollar amount and instead look at it on a monthly basis. Generating savings will take time, so if you can look at it on shorter terms it will seem like an obtainable goal.

Start Small

When money is tight it’s hard to divert even a few dollars away from other items in your budget. If this is the case you just need to start small. In an example, let’s say you are paid bi-weekly. Would $10 coming out of your paycheck really be noticed? Probably not. This comes to only $20 per month, which you are probably thinking is almost nothing. That is true, it isn’t much money and at that rate it would take years to save up enough money to fund your savings. That isn’t the point. The point here is to establish something, even if it’s a small amount. This establishes a good habit which is what you need in order to be successful in creating savings.

Once you have established a regular and automatic deposit into your savings you will generally not even notice that money coming out after a few deposits. You begin to forget and naturally adjust your spending habits to make up for the fewer dollars. This is the point in which you need to make changes. If you get used to $10 or $20 coming out per paycheck, bump it up after a month or two by another $10 or $20. Let that new amount come out for a few paychecks or months and then add a few more dollars to this amount. This gradual process will reduce the shock and allow you to slowly build up your savings.

Remember, this doesn’t happen overnight and don’t expect it to. Most people get discouraged simply because it seems impossible to save a sizable amount of money in a short amount of time. So start slowly and with modest amounts, then adjust those amounts in small increments over time. Before you know it you will be saving enough money to adaquately build your savings in a reasonable amount of time. The real key is to get into the habit of saving money regularly. Time will take care of the rest.

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Filed Under: Banking

About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.

Personal Checks
Personal Checks

I think automatically deducted savings is a great help in trying to save. The hard thing is to replenish your savings when you have to use it for emergencies.

Damon Day
Damon Day

Hello Jeremy,

Great post. One thing that I hear from my clients pretty often is that they can't save any money because they are in debt, or that it doesn't make sense to save money if they are paying 15% interest on outstanding credit card balances.

So people tend to use that as a justification. However, what I have found and recommend is that, even if you are in debt, you need to save money first. Yes you could argue that it will cost more in interest but the act of making yourself save the money is a motivating factor to be more frugal and pay off the debt.

Many people will go for years without saving because they are always in debt. So you should never, not save thinking it is financially a better idea to pay off your debt. It is important to put together a comprehensive plan to get out of debt but saving money should be part of that plan at the same time.

The act of saving the money is what is important

Goran Web | Net Age
Goran Web | Net Age

Saving is something that just doesn't come easy, but by doing it bit by little bit you can actually build up a considerable nest-egg. The value of having a financial buffer can not be over-emphasized.


I have $25/wk taken out of my paycheck each week into a savings account. I also read on the in the money section under one of the money blogs a challenge to put $1.00 bills away. This started last year. (The new challenge for '09 is $5.00 bill challenge. Basically, every time you get your hands on $1's (or $5's) you save them for a rainy day, or a special purchase. Even coin adds up after awhile. It gets old when the phrase gets spoken "I can't afford to save any money." Even 50 cents a day will equal $182.50 at the end of the year. and a $1.00 a day brings $365.00 When I tell people this, they look amazed. I do like the idea of taking some $ from my paycheck and investing into a Roth IRA. I may look into very shortly.

Savings Accounts Girl
Savings Accounts Girl

Automatic saving is great - even if you don't like a roth ira or whatnot - you can always pull money from checking to savings automatically every month as well. This is especially good for those with short term savings goals since the money can be touched whenever needed for small projects, vacations, or anything.


Automatic savings is key. It has been helping me add to my Roth IRA and Mutual Fund accounts. I should set one up for savings, but I just mentally automatically do it. You don't miss the money, don't even realize it's gone and it can slowly build.

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