Saving money can pose a challenge for anyone, as it can often seem that it has a way of slipping through your fingers. One way to accumulate funds is to establish some guidelines for how you handle your hard-earned income. Following a few basic rules can help you save money, both in terms of setting it aside for the future and in reducing how much you spend.
You never know when a financial emergency such as an unexpected car repair or medical bill will arise, so endeavor to set aside three months of your income to provide a financial cushion. It may take you some time to save this amount of money, so it can be helpful to have access to an equal amount of credit until you reach that point.
Take advantage of systematic savings vehicles where money is automatically deducted from your paycheck or bank account on a regular basis. Examples include a 401k plan at work or a mutual fund that offers an automatic investment program. This prevents you from having to get into the habit of manually funding your savings and investment accounts, which is especially beneficial if you're not a disciplined saver.
Saving for College
According to the MSN Money website, you should try to save at least $25 per month per child to help finance your kids' college education. If you start when the child is born and continue until she reaches age 18, you'll accumulate a minimum of $5,400, not counting interest. While this amount may seem insignificant given the high cost of college as of 2011, it still reduces the amount your child may have to borrow in the form of student loans. Educational savings vehicles such as 529 plans help you accumulate additional interest while providing certain tax benefits.
10-15-20 Retirement Rule
The MSN Money website indicates that following the 10-15-20 rule can be an effective way to accumulate funds for retirement, as long as you start by the time you reach your early 30s. According to the rule, you should save 10 percent of your income towards retirement if you want to make ends meet, 15 percent if you want to live more comfortably and 20 percent if you want to retire early.
Save money by making less expensive or even free substitutions for things you enjoy in all areas of your life. For example, make it a rule to first look for that new book you want at the local library instead of paying $25 or $30 for it at the bookstore. If you're a golfer, play at the local public course instead of at costly private courses or country clubs. Try cheaper store brands instead of national brands at the grocery store and make your coffee at home instead of buying it at expensive speciality coffee shops.
Have a Shopping Plan
Retail stores are filled with attractive displays designed to entice you to make impulse purchases. To avoid spending more money than you can afford, always have a plan before you enter the store. Make a list of what you need, and do not deviate from it. At the grocery store, avoid the temptation to buy the candy or magazines on display at the checkout counter, and stay away from the hottest new fashions at the department store when your intent is to purchase socks and underwear.
Before buying big-ticket items, follow the 30-day rule to determine if you really need or even want the item. Give yourself 30 days to weigh the pros and cons of the purchase, and see if you feel the same way at the end of the time frame. You might discover that you can do without the item after all, and you'll save yourself a good deal of money in the end. Maybe you'll decide you can squeeze another year or two out of your current vehicle or that you can get by without that fancy new home entertainment system.
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