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Feeding the Piggy Bank
Well, it’s about time! Here are some simple saving strategies from the North Carolina Association of Certified Public Accountants: Set your sites The key to saving is to have a goal, whether it’s a comfortable retirement, a child’s college education or a new car. When you strive toward something specific, you’re more likely to reach your target. Spend less Systematically reducing the amount that flows out of your bank account will, naturally, increase the amount you have available to save. If you don’t know where your money goes, track your spending. Keep a month-long diary in which you record purchases. Then, look for ways to cut back. Pay yourself first People have a tendency to pay their bills and buy things they need first and save whatever is left over. The trouble is: There’s seldom anything remaining. Next month, before you pay the electric bill, get a new outfit or enjoy dinner at your favorite restaurant, pay a pre-determined amount to your savings account. Make it automatic A good way to put savings first is to arrange for your employer to automatically deduct a certain sum from your paycheck and deposit it directly to a savings or investment account. Another option is to establish an account with a mutual fund and get an automatic transfer from your checking or savings into the fund. Bank your raise Next time you get a raise, before you get used to living on a higher salary, find a way to direct the extra money to your savings program. Follow the same strategy for any bonuses you receive from your employer. Don’t spend your refund If you’re expecting a big check from the IRS, avoid the temptation to spend it on a closet full of shoes. Instead, have your refund deposited directly to a savings account. Keep making payments When you finish paying off a large loan or major expense, such as a car or college tuition bill, keep making the payments…only re-direct them to your savings or investment account. Save “extra” paychecks Depending on whether you get paid every two weeks or weekly, you probably set up your budget based on getting two or four paychecks a month. A couple times a year, though, there is an extra paycheck in the month. Put that entire check into your savings account. Contribute the maximum to your 401(k) If you participate in an employer-sponsored retirement plan, try increasing your contribution by one or two percent. You probably won’t miss the money, and if your contribution qualifies for an employer match, you’ll be getting more “free” money. If your company doesn’t offer a qualified retirement plan, set up and contribute to an IRA instead. Deposit found money Whether it’s a birthday gift of cash, a dividend check or an insurance reimbursement, bank windfalls to build your savings-account balance. Pay yourself back If you’re forced to dip into your savings in an emergency, treat it as a loan. Set up a repayment schedule for putting back the borrowed sum as quickly as possible. |
Is this the year you plan to make good on your promise to start saving some money?