Many of the people I know are neck deep in debt, treading water looking for a life ring. That life ring is not coming from the shore, you need to create one yourself! Most of the money blogs and books I've read all say the same thing, you need to have a minimum of 6 months life expenses saved "just in case". The problem is for most us that "just in case" money seems to always get used up long before we can save enough money to build a decent 6 month kitty for security. These blogs also all tell you the same way to build up that new kitty. Start with saving 10% of your check, get used to that then increase to 15%, so on and so forth. While there is merit in that process, it does work, but you need to build up your emergency 30 day cushion first. Once this cushion is established you will never have and excuse not to save your 10% a week because you will already have "just in case" money built into your monthly budget. This money is not set aside in an account waiting to be used, it is already spent. That way you will never miss it! Until of course "just in case" happens, but when it does you are prepared and it won't affect your savings or your life!
So how does it work? It's a very simple budgeting trick I use, pay your bills the day after they are due! NO, I'm not saying you should pay your bills a day late, I'm saying you should pay them 29 days early. Here's how it works. For this example, let's say your cell phone bill is due on the first of each month. Most people will pay the bill just before the due date or right on the due date. They will then wait the full billing cycle and repeat. In order to build our 30 day cushion we must pay the bill on the 2nd. So when you first start, you will pay your bill a normal, then you will again pay it on the 2nd. This means you will be a full billing cycle ahead on your bill. Once you have completed this process with one bill you will complete it with all your other monthly bills, thus creating your 30 day cushion for all your bills! Creating savings with this budgeting trick benefits you for many reasons. First, instead of having the cash for a months worth of bills hiding in your underwear drawer where you are always tempted to take out a few bucks, it's already spent. Second, since this cushion is in the form of prepaid bills, you won't have to stress out about your bills if an unforeseen expense comes up. You already have the money to pay for it! Lastly, when that flat tire comes or your favorite band comes to town you won't have to neglect the savings you put away monthly to cover that expense. You can pay for those things, still put away you 10% to build your 6 month kitty, and not get behind in your bills.
Here's an in depth example. We have paid our cell phone bill (let's say its 100$) on the Jan 2nd which pays us for the coming due date of Feb 1st. We would normally keep this cycle on repeat but this month we had to have a plumber come make a repair. So instead of paying the cell phone bill again on the 2nd you will use that money to cover the plumber's bill. We have covered the unexpected expense without shorting our bills or touching our savings! Since we are paid through Feb 1 our due date isn't until March 1. As long as we just pay the cell phone bill that we normally pay on the 2nd a day earlier than normal we are all set. We will of course have to work our way back up to another 30 day cushion which won't be an issue since we have already done it once!
Don't worry, I know the next question. What if I don't have the money to pay a bill twice in a few days ( which is necessary if you want to build the cushion fast)? The answer is to slowly build it up weekly. Pay your bill as normal on the 1st. For the next month pay it a week early, repeat process till your paying on the day after the initial due date.
That's how you can build up a 30 day financial cushion! It's a great way to budget your bills and create some security for the "just in case" moments. I have used this method for years, I haven't had to touch my savings for any unexpected expenses since I started doing this. This budgeting tool has saved me money by allowing me always put away my 10% and given me the security of knowing I will have 30 days covered if "just it case" happens. I hope it does the same for you!
Thanks for reading!
A little bit about me! I'm a family man with a lovely wife and three awesome boys. I have a bit of an entrepreneur bug. I started and sold my own company twice ( small businesses but the experience was valuable), I've dabbled in real estate, been an Ebay reseller, and also spent many years in management roles which is my current stream of income ( plus a few side streams I've put together). I'd say all in all I'm your typical guy trying to make a better life for his Family.