Here are five tips on how you can still put money away in an emergency savings account even when money is tight.

1. Pick up a side job

The best way to create an emergency savings account when living paycheck to paycheck is to get a side job. Another job on the side means another paycheck, and all of that money can go into an emergency savings account. If you have the time and capacity to take on an additional job, then this can be a secure way to earn extra money in a pinch. Be sure to set up a savings account for these paychecks to go into, so you aren’t tempted to spend them.

2. Setup paycheck auto transfers

Similar to how you can elect on your W-4 to have an additional amount of money withdrawn from your paychecks to go to taxes, most companies also allow employees to set up a paycheck to transfer to multiple accounts. Elect to have a small amount transferred to savings on your payday (just $10 per paycheck adds up to about $260 in emergency funds). Every little bit counts, so don’t be ashamed to make the amount as small as you can afford.

3. Create a budget and identify adjustable expenses

Everyone can benefit from a budget, but if you’re living paycheck to paycheck, then a monthly budget is a necessity. A budget is a snapshot in time that lists all of your income and expenses for the month. Once your budget is set in place, you can review all of your “adjustable” expenses for ways to free up money. Adjustable expenses are variable, meaning they change each month, or are negotiable with vendors. Common adjustable expenses include dining out, entertainment, and groceries. You can also look for ways to lower your home/auto insurance, cable/internet/phone service, and utilities by shopping around for quotes and looking for loyalty discounts.

4. Build Up Rewards on Everyday Spending

There are many different sites that offer cash rewards or gift cards if you use their apps as a gateway to your purchases. My favorite one right now is Ibotta, which allows me to scan grocery or retail receipts into the app to see if any retailers are offering cashback. If you purchased a cashback item, you scan the bar code on the item and the app applies the credit to your account. In my first week of using this app I managed to earn over $10.00 back on regular grocery and Amazon purchases!

5. Clean out your house

You can sell clothing, working appliances, good quality furniture, and other items in your home that you’re no longer using. There are many online resources such as Facebook Marketplace, Craigslist, eBay, Amazon, Thred-Up, etc. that will give you a platform to sell your items, as well as second-hand retailers like Stuff Etc. We tend to accumulate a lot of stuff in a short amount of time, so how do we know what to get rid of? A good rule of thumb is if you put a non-seasonal item in storage for six months and didn’t need or miss it, then you should get rid of it. For seasonal items, if you can go two seasons without using it then it might be time to sell. Deposit any proceeds made on these items into your savings account upon receipt.

Turning to credit as an emergency fund should only be a temporary option when you are just starting to build up your emergency savings. If you must take this route, then talk with someone at your local credit union about low-interest credit options such as a home equity line of credit or a personal loan. Credit cards should be a last resort as they are usually higher interest, and some have hidden annual fees.

I stress that I do not recommend relying on credit for emergencies unless all other means have been exhausted. While a credit card or loan is nice to have on hand to quickly get you out of a bind, if you’re living paycheck to paycheck these options may create future headaches as you struggle to pay off the balance plus interest.

Be proactive and use the above tips to start building your emergency savings now so you’re prepared when the unexpected hits. If the idea of creating a budget or starting to save totally overwhelms you, visit your local Collins branch or call our team at 800-475-1150. We’re happy to help create a budget and look for ways to save, putting you on the path to financial success.

- Heidi Lamp, Commercial Credit Analyst