Making room for surprises

There are two angles to achieving this:

1) Earn more.

2) Spend less.

To earn more, options to consider might include:

- Asking for a raise. Ask your boss what ways you could add more value. If self-employed, identify and double down on the 20% of activities that bring in 80% of the revenue.

- Look for another job. Large raises are much more likely in a job change than in your current job. It's fairly easy to rope off a little time each week to: a) polish your resume, send it off to others for feedback, b) apply for one job. Do this for a predetermined period (maybe 2 months). You might be surprised.

- Get a second job. This is a hard sell for most adults, who are already working long hours, are exhausted, and have young children. But perhaps you are in circumstances where a part-time job is a possibility.

- Start a side gig. Almost all of these are more hype than materially worthwhile, but you might find something small, perhaps something you are already doing, that you can monetize. For example, if you make bread for your family, making a few extra loaves and selling them to interested neighbors might be a low-hassle, high return side gig.

- Capture freebies you presently give to your children. These probably cause more harm than good. Do you provide a cellphone, car insurance, gas, or money to your minor children? Do you provide any of these things, housing, food, or tuition to your adult children? Perhaps you should consider transitioning them to paying for things themselves. In the case of food and lodging for adult children, these things could provide additional income to you in the event that your kids decide to remain at home once you start charging them room and board. Note that such an arrangement can still be a mutual win if you partially subsidize rates to make them more affordable than market.

- Sell things you have that you don't need.

To spend less, you might consider:

- Write out every expense made by your family for the last 60 days. Look over the list, and ask whether the purchase provided more benefit than cost. Eliminate any purchase that did not. Pay close attention to details, such as specific items you buy at the grocery store.

- Consider selling things that cost you money to keep. Ask whether these things provide greater value than their cost. What streaming services or other recurring costs do you have? Are these things worth their long-term cost? Are there cheaper alternatives? Purchasing used DVDs or mp3 music might be much cheaper than streaming services. Maybe you have a storage unit. Add up the cost over four years, and ask what in that unit is worth such a price. Maybe you have a boat that you only use twice a summer. Maybe you pay insurance and maintenance on a car that you don't need.

- Shop around for cheaper insurance. Car and home policies vary considerably between providers, and the rates constantly change.

- Consider reducing coverage of insurance rates. For example, mortgage companies require homeowner's policies, but the highest deductible policy may cost only half what a normal policy costs, while still meeting your mortgage company's requirements. Coverage options exist with car insurance as well, though you should be more careful with that, since a car accident is much more likely than a home disaster.

- Cellphone purchase and service plans can be replaced with off-brand service plans (which use the same towers and service as the main brands) for less than half the cost, and you can buy a cellphone that is a little older and still new for a small fraction of the price of a new one.

Try to start thinking about money in terms of long-term benefit instead of considering purchases based on the money you have right now. For example, consider setting up a budget and holding yourself to it. In your budget, force yourself to set aside a set amount of savings each month, no matter how small you have to start.

As you accumulate savings, think of what you can do with it to reduce long term costs or increase recurring revenue. The easiest example of this is opening a high yield savings account (paypal offers an easy option for this). You might consider a passive investment such as an S&P500 index fund. You can also identify other specific changes. For example, do you have a very old vehicle that has continuous repair costs? Is there a newer car (not necessarily new) that has a lower per-mile cost over the lifetime of the car, through some combination of purchase price, MPG, or lifetime duration? For example, for a commuter car, you will be hard pressed to beat the long-term cost of a diesel Chevy Cruze (~50 mpg). If you need 4wd, the answer is a RAM 1500 ecodiesel. Searching for specific models, years, and mileage is possible with cargurus.com. Doing a national search can help you find a vehicle several thousands less than bluebook, as most dealers have rules that force them to sell a car at wholesale once it has been on their lot longer than their policies allow. For most people, applying this advice can easily free up more than $1,000 per month, and many could save much more than that.