Google +LinkedInPinterestYouTubeInstagramTwitterFacebook
USAA is The American Legion's preferred provider of financial services. Offering a range of top-rated financial and insurance products and services. USAA welcomes honorably discharged U.S. military veterans, active-duty troops and qualified family members and descendants of those who have served. USAA contributes funds to American Legion programs when members join through a dedicated channel:
usaa.com/legion or by calling toll-free at 1-877-699-2654.

7 ways to save for emergencies

7 ways to save for emergencies

It's easy for the experts to recommend that you build your emergency fund. But many consumers wonder just how to do that when they're trying to pay the mortgage, shed debt and handle all of life's other expenses.

"Probably one of the most underused pieces of financial advice we give is to scrape together an emergency fund of three to six months of living expenses," says JJ Montanaro, a financial planner with USAA. "With so many competing demands for cash, many people just don't do it. But that's a really bad idea, because if you don't have any money in the bank, you're almost certain to end up in debt as a result of unexpected expenses."

If you haven't started saving, don't panic. Building an emergency fund is often as easy as monitoring where your money goes, trimming expenses, and making regular contributions to a savings account.

These tips can help you get started:

Set a goal. First, you need to estimate how much you should save. Jot down what you spend each month on essentials, such as your rent or mortgage, utilities, food, car payment and insurance. Once you've totaled the amount, multiply that figure by three to come up with your minimum goal. If you have no savings, $1,000 is a reasonable starting goal for many families, and you can work gradually toward saving a larger amount. And don't be intimidated by the numbers; the important thing is to get started and begin setting aside money on a regular basis.

Track expenses. With online access to your checking account, it's easier than ever to see where your money goes. Track your spending for one month, break down your daily spending average, and commit to spending less each day. Identify nonessential purchases, and then trim those from your daily budget. This cash can go into your savings or emergency fund.

Deposit automatically. An automatic contribution to your savings account each payday will make you less likely to miss the money you set side. For example, you can use direct deposit to move a certain amount, say $25 or $50, from each paycheck to your savings account.

Save unexpected income. A tax refund or consumer rebate can contribute to a healthy savings account. So can a pay raise, bonus, cost-of-living adjustment or other extra income. Directing at least a portion of this money to your emergency fund will help you reach your savings goal sooner than you calculated.

Make minimum payments. Paying off credit cards makes sense, but not at the expense of your emergency fund. Instead, pay the minimum on credit card bills each month so you can put money into savings, too. Once your emergency fund reaches your goal, you can resume paying off more credit card debt. Doing so will keep you from having to use your credit card for emergencies — a costly option.

Practice the power of 20. Prepare for the inevitable emergency by stashing away $20 per week. Doing that for a year will put $1,040 in your savings account, which, according to the National Foundation for Credit Counseling, should be enough to see you through most short-term, everyday emergencies. NFCC spokeswoman Gail Cunningham says that, while finding $20 per week to save can be difficult, an adequate emergency fund and stable financial situation are worth the hard work. Once the emergency account has reached your goal, the group recommends putting the $20 a week toward reducing debt.

Rounding up. An easy way to save is to round up all your debit card purchases to the nearest dollar, and move the difference into your savings account. For example, if you bought lunch for $8.36, round up to $9 and save the 64 cents. Use your online checking account to compare the balance you've tracked to the actual balance each month, and then transfer the difference into your savings account.