Saving Money

Most of us could easily spend every penny we make and more. Saving doesn't mean making radical changes in your lifestyle. Just becoming more conscious of where your money is being spent will help you find ways to save.

Complete a spending plan worksheet to take a look at where you're spending your money over a three-month period. Start taking notes about where your money is going, or consider using your debit card to help you keep track. You'll be amazed at the waste patterns you spot, and recognizing them is the key to changing.

Before you start investing your new savings, make sure you have an adequate emergency fund. Most experts recommend that you set aside three to six months worth of living expenses in a money market account or CDs that will be easily accessible in an emergency. Having an adequate emergency account will put you at ease about investing for the future.

Then be creative about ways you can save; view it as a challenge and you may find you're having fun along the way. Here are a few relatively painless ways to tighten your belt a notch or two:

• Raise your insurance deductibles (and drop the towing on your auto insurance - it costs more in increased premiums over time than you'll pay to the tow truck operator). With what you'll save in premiums, you'll more than cover any cash outlay you might have to make.
• Don't over-withhold on your taxes. As nice as it is to get a refund, the government is using your money interest-free while you could have been investing it. If you got a refund last year, adjust your withholding to eliminate it and allocate the extra to your IRA or 401(k). Just be sure not to under-withhold, or you could be liable for penalties and interest.
• Use your 401(k) or IRA account to save money by cutting taxes and generating earnings tax deferred. If you're in the 28% tax bracket (and most of us are), one dollar out of every four dollars you put into a pre-tax retirement account is paid for by reduced taxes - not reduced take-home pay. Also be sure to take full advantage of your employer's match by investing enough to qualify for that important benefit. If you don't, it's like turning down free money.
• Avoid late fees on credit cards or video rentals. It's just money down the drain.
• Avoid ATM surcharges. Use your debit card, plan ahead to use your own bank's ATM or get cash back when you grocery shop.
• Shop around for the lowest long-distance telephone carrier - or better yet - use e-mail when you can.
• Comparison shop among airlines. Watch for sales and utilize e-saver online specials. If possible, be flexible about your departure/arrival cities - 30 miles or less between cities can sometimes save you hundreds of dollars in fares.
• Pay your bills online or use auto-withdrawal to save on the cost of postage.
• Have your hair cut every 5 weeks instead of every 4 weeks and you can save two haircuts a year.

These are just a few money-saving strategies, and you're sure to come up with many more. Talk to your friends about ways they budget without truly denying themselves.

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