Smart Savings Strategies for Spring

[Apr 11, 2008.]

 

This spring, financial experts say it's a good idea for consumers to start saving in earnest.

A recent national poll showed that 40% of individuals who make New Year's resolutions include a vow to save more money. Still, nearly half of those who pledged to start saving decide to bail out within a month of their resolution.

How do you beat the odds and create a savings plan you can really live with? One idea is to make saving an automatic habit. You can do that by having money automatically transferred from your checking account into a mutual fund every month. That way, you can begin saving for your retirement, without even thinking about it. You can begin with payments of $250 or less each month, then grow that amount as your comfort level increases.

Another effective strategy is to set a savings goal each year and reward yourself if you hit the target. For instance, if you manage to sock away $3,000 in a given year, you might reward yourself with a treat such as a new cell phone or a laptop computer.

Perhaps, though, a strategy which involves a penalty would work better in your particular case. For instance, you might decide that, if you don't reach a certain savings amount, you'll have to forgo your favorite television shows or a few nights on the town.

Yet another winning idea is to invest in a Roth 401(k). It's a great way to save money while also saving money on your tax bill.

You might also consider adopting the "buddy system," asking a friend to assist you as you try to save money. You can even turn it into a game as you see who can save the most money by a particular date. Your competitive nature may ultimately win out, allowing you to save money that might otherwise have been spent on needless luxuries.