Steady saving in a shaky economy

When you’re living paycheck to paycheck, it’s easy to blow off savings. As a reformed over-spender, I thought I had developed a solid saving routine—until I looked at my checkbook recently and realized I haven’t transferred any money to my savings account for a couple months. Back to the drawing board, I guess—I think it’s finally time to sign up for automatic deposit.

Sure, I’d like to keep all the money I earn. But I know it’s not realistic. Our crumbling economy has made it more essential than ever to have a cash cushion. Most importantly, you should have an emergency fund—a few months of income saved up so that if the worst happens—you lose your job, have a medical emergency or the car breaks down—you’ll be able to manage.

After you’ve stocked up the emergency fund, the rest can go towards paying down debt. If it wasn’t for getting my savings act together a few years back, I’d still be carrying the thousands of dollars of debt I racked up spending recklessly in college. Back then, I couldn’t get approved for an apartment let alone dream of owning my own home. Now that my debt’s paid, I need to keep saving for a house, retirement (don’t want to be a working grandma, after all) and for those dream vacations I want to take someday. Here are some tips that worked for me—and that I hope can keep working.

Trade your credit card for cash

Paying with plastic makes it too easy to spend more than you bring in each paycheck—and to continue adding to your debt burden. Withdrawing only what you need from the ATM will make it easier to prioritize purchases. I know that when I put myself on a cash-only diet and my wallet is nearly empty, it’s a lot easier to pass up the drive-thru java station on the way home from work. I’d rather save the money for groceries and gas, which I know I need no matter what.

Pinch pennies

Now that you’re using cash, drop your leftover coins into a jar every week or so. I don’t skimp on mine—I like to put quarters and dimes in there along with pennies and nickels. Seeing the jar fill up is a physical reminder of how discipline can pay off. Roll it up and turn it in every month, then use the money to pay off your credit card debt. I still put my change into the jar. When I’m good about saving part of my paycheck, I sometimes use the jar money just to treat myself. When I forget to save otherwise, I put the jar earnings into my account and feel better knowing that I at least saved something that month.

Automatic savings

If you earn a steady paycheck, consider having a portion of your check deposited automatically into your savings account. I’ve used this in the past, and I’d like to start doing it again. When you never see the money to begin with, it’s like it doesn’t exist. There’s no urge to spend it and no resistance to saving it.

At this point, you might be thinking, How exactly am I supposed to save when I’m scrimping to make ends meet as it is? I know what you mean. And if you’re consistently spending more than you earn, suddenly living on less will probably be difficult. First, you’ll first need to budget. Don’t let the “B” word scare you—it’s really not as painful as it sounds. Budgeting is just taking a look at everything you’re spending on to see where you can do without, or at least cut back. Maybe you buy bottled water. Why not refill a reusable bottle instead? Spend a fortune at the grocery store? Try going meatless a couple nights a week (meat is one of the most expensive items you’ll buy at the store). Find the least painless places to make changes and then do it.

Still overwhelmed? Don’t worry. We’ve done a lot of the work for you. Order our free Financial Toolkit to learn how you can save up to $20,000 a year by tweaking your spending habits, among other tips. Want a more personalized plan? Sign up for our free one-on-one debt analysis. Saving is often intimidating at first, but it’s really all about momentum. I liken it to climbing a hill or mountain—it’s an uphill battle initially, but once you get a steady pace going you build momentum and it gets easier. And eventually, you get to the point where the rest is downhill. Not to mention you have a great view.

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