***3 Steps to Make Saving Simple!

"I never realized I could accumulate wealth over time by putting a small amount of money aside each month. I always thought I had to wait until I had large amounts of money before I could start a retirement or emergency savings account." This comment came from a woman who had been attending one of my Financial Dating classes. This paradigm shift was causing a new world of financial possibilities to open up for her. I experienced a similar shift when I helped my husband open his retirement account. We started his account with just $25. Each month we increased his contributions by $10. Because the amount was so small, we found it easy to do, and it never caused any financial strain. We were able to boost our retirement savings even more after we paid off our credit card debt. We took our monthly credit card payment and applied it towards our retirement savings. Because we had already adjusted financially to making our credit card payments, it was easy to apply the payments towards retirement. It was a great and effective strategy – one that anyone can do. My husband and I chose to “invest in ourselves first” by automating our payments towards our credit card debts, and our retirement and emergency savings. We didn't want to wait to see if we would have money available at the end of each month. Our payments were never late, and they occurred each month - like clockwork. I notice many couples and individuals do exactly the opposite - they wait to see how much money they have at the end of the month before putting it towards their savings. Not surprisingly, when that time rolls around, they discover there’s no money left! I know the "invest in yourself first" concept can be challenging for self-employed professionals who can’t predict exactly how much they’ll make during any given month. My recommendation is this: make your payments automatic by choosing a time of the month when you’re most likely to have cash coming in from sales, projects or clients. Some people resist the "pay yourself first" concept; they want to maintain a sense of control over when their money leaves their checking account. Or they resist because they feel like there’s too little “wiggle room” - they’re living from paycheck to paycheck and it seems that there’s absolutely no extra money for savings. While it's good to notice resistance to automating your savings, you need to be honest and ask yourself: Is my current system working for me? Is my savings growing? Is my debt getting paid off? So, how do you pay yourself first? You do it, by just doing it. You do it by being willing to try a new approach. I always tell my clients, “start small and grow tall - increase your contributions gradually over time”. It’s a lot easier than you think. And once you’ve done it, you can watch your savings grow and your debt shrink, with little thought or effort. The best place to start saving is in a money market account or a money market fund. Money market accounts are available at most banks or credit unions where deposits are insured by the FDIC for up $100,000. They earn about twice as much interest as a regular savings account. Money market funds are not insured by the FDIC. But if you’re willing to take a little more risk they often have higher rates of return than money market accounts. These funds are invested in certificates of deposits (CD’s) and U.S. Treasury bills. So, again, here’s what you can do now: 1. Make saving a priority. 2. Open a money market account or money market fund. You can check research rates on money market accounts – I especially like ingdirect.com If opening a money market account or fund feels too intimidating, open a regular savings account at your local bank. After you’ve done some additional research, transfer the money to a money market account or fund. 3. Start with as little as a $25 (or less) per month and make it automatic Pick a day of the month shortly after you typically receive income. Gradually increase your savings each month by 1% of your income or $10 a month. Then congratulate yourself for taking a big leap towards financial health and happiness.