The following is
an excerpt from The Wall Street Journal, Sunday January 5, 2003
"Get Your Financial Act Together in 2003" -Terri Cullen
- Follow the Money
How many times have you said to yourself: "I took $40 out of the ATM yesterday and I have no idea where it went." If this sounds familiar, begin with tracking every single purchase for a month. If you don't get a receipt, write the purchase down on a slip of paper. At month end figure out how much went to nonessential purchases. Add up your fixed expenses. If the total of the two adds up to more than your monthly salary, you have to curb your spending habits. Additionally instead of throwing all of your paper work in a pile for sorting later, create a file drawer to have the documents readily available.
- Shave (Don't Slash)
Giving yourself permission to splurge every now and then makes it easier to make the sacrifices it will take to boost your savings. Rather than cutting out all nonessentials, shave a percentage off each week. As an example, if you spend $100 a week on non-essentials, find a way to cut $25 each week. While fixed costs are more difficult to trim, look to see if there is a cheaper cell phone plan, or if there are extra cable channels that you are paying for that you don't use.
- Save 10% Automatically
Once you have freed up some cash for savings, force yourself to save that money by depositing it directly into a savings account. By-pass your checking account, which makes the money easier to spend. A good rule of thumb is to save 10% of your after tax income for major purchases.
- Milk Those Tax Benefits
To get serious about your retirement savings, start by maxing out your contributions to your employer sponsored retirement plan. For every dollar you contribute it will only cost you 70 cents, assuming you are in a 30% tax bracket. Uncle Sam will contribute the remaining 30 cents to your retirement.
- Protect Rainy-Day Fund
Experts say that you should stockpile at least three to six months of living expenses into a savings account for emergencies. Once the emergency account is established, the trick is to avoid spending the money. To resist the urge to dip into this account, decline a debit card for the account and if possible set up the account at a bank or credit union that isn't a quick car trip away.
