Saving regularly is key to building financial security. Saving regularly and manage your money successfully doesn't need to mean doing without a treat or special-occasion spending. Saving is the tool that can make special purchases and opportunities possible.
If you want to find money to save, you need to know where all your money is going in the first place. Track income and spending to identify the places where the money is disappearing.
Make a list of take-home pay and weekly, bi-weekly or monthly expenses. Be sure you include credit card and loan payments as well as periodic payments, such as semi-annual car insurance or property taxes.
Separate your expenses into two categories: What are the must-haves? Housing, utilities, health insurance, food, transportation and clothing are examples. What are your discretionary or "nice to have, but not necessary" expenses? Entertainment and eating out are two examples that fall into this category.
Cover the essentials first. Then examine your other expenses — are there places where you could spend less and free dollars for savings? Use all of this information to create a realistic spending plan or budget that includes a line item for saving-even if it's only a small amount.
Set aside money for an emergency fund. Try to build that fund to a minimum of one to six months' expenses. As little as $500 can be helpful when you have unexpected expenses such as an accident or injury, dental bills, car repairs or a plumbing emergency. Setting aside money to meet these unexpected expenses provides you a financial safety net.
There are lots of ways to spend less and increase your savings. Here are a few guidelines:
Convenience costs. Whether you're buying groceries at a convenience store or using an ATM machine that charges you extra fees, you're almost always paying more than if you had planned ahead.
Do your homework. Especially when it comes to big-ticket items, you can save a lot of money if you know all the costs involved and all your options before you buy.
Wants vs. needs. Before you buy, ask yourself, "Do I really need this?" If the answer is yes, consider whether it falls within your budget and how it affects your saving goals.
Don't go shopping unless you have a list of needed items. Stick to the list.
Pay yourself first by making a savings deposit before you begin spending your paycheck. When you "pay yourself first," you put money toward your saving goal before you can spend it. To ensure savings, make it automatic. Don't wait until the end of the month when you may be short of cash.
Allow each member of the household some discretionary money, including allowances for children.
One of the most important things you can learn in life is how to save money. Once you start, it gets easier and easier and before you know it, you're on your way to making your dreams a reality. For more ideas and information visit, www.americasaves.org and www.mymoney.gov both are trusted sources for financial information.
Lynn Little is a family and consumer sciences educator with University of Maryland Extension in Washington County.