Pay Yourself First

You're probably inclined to pay everyone else first − whether it's your landlord or your grocer or the electric company. But it's vital to start paying yourself first by saving money. Once you've made a contribution to your financial longevity and well-being, then you can divide up your money to cover everything else. Don't worry. You'll more than likely have plenty left over to cover everything you need.

In fact, most banks make this easier. You can have them automatically transfer funds from your checking account to your savings account, money market, mutual fund and other accounts. You might also check with your employer. Companies will often deduct savings from paychecks if asked.

Saving

Savings can help you achieve any financial goal. Whether it's a comfortable retirement, a down payment for a house, or a new car or stereo, you can get there by setting money aside. And best of all, you can have what you want without getting bogged down in debt.

Yet if you're like most people, you don't save as much as you'd like to. Or you don't save at all. Americans spend more than we earn. Consider that the national personal savings rate has dipped to the lowest point since the Great Depression. Today's high energy, home and food prices may make saving seem less possible than ever.

But the time is now. And with a little forethought and effort, saving money is not only possible, it's easy.

Make Saving a Priority

You'll be more likely to save money if you make it a priority. Sit down and figure out what you'd like to save money for − retirement, a house, car, college, dream vacation − and how much it will cost. Then make your plan:

  • Set a timeline for when you'd like to reach your goal.
  • Set a schedule by dividing the total goal amount by the number of weeks, months or pay periods between now and your goal date.
  • Be vigilant by treating your savings contribution just like any other must-pay expense, such as rent or groceries.

Find Money to Save

While it may seem difficult sometimes just to make ends meet, chances are you have extra money you didn't even know about. Here are some ways to find it:

  • Keep track of everything you spend for a week. You might be surprised what you're buying, and what you can do without.
  • Make purchases with cash. This can help you stick to a budget and avoid impulse purchases. Simply decide ahead of time how much you want to spend and then set aside that amount in cash before you go shopping.
  • Lower your bills. Many creditors will give borrowers a lower interest rate if they're asked. Also, conserving electricity and gas can make a big difference.
  • Rank your nonessential expenses. Keep the ones you like the best and cut the items on the bottom of the list.
  • Pack a lunch. Or cook more dinners at home. Eating out at restaurants can eat up a lot of money that could be saved.