Generally, if you choose to have a higher deductible on your auto, home, or health insurance policy, you will pay less per month or year on your premiums. This can save you a significant amount of money in the long run.

However, many people choose to have lower deductibles because they can’t afford the high deductible if, for some reason, they have to pay it. If I have learned nothing else in this past year of tracking my spending, I have learned that things happen when you least expect them. So for high deductible policies, I have a plan.

Create a specific savings account, separate from your general emergency fund, that is your deductible savings account. Add up the deductibles on your policies, and save an appropriate amount in this account that will cover those deductibles if needed. The last thing you want to worry about if you’ve been in an accident, are in the hospital, or your house was damaged, is how you are going to pay the deductible. Be proactive, and have a plan. Being frugal is about more than saving money, it’s about living life to the fullest while making smart money choices. Be smart by being prepared for the worst while you hope for the best.

This frugal tip provided by paidtwice of I’ve Paid For This Twice Already…