Getting back on track – and sooner rather than later – is important. Why? You can reap benefits thanks to the effects of time. The earlier you put cash into a prudent savings plan, the more time can help increase its value. If you’re having problems getting started, Ben Franklin is credited with another saying that applies: "Be honest with yourself." Have recent economic events slowed or stopped your savings efforts? Have constant changes to tax laws and the magnitude of investment choices added to your confusion? If your answer to either question is yes, it is time for both an attitude and a strategy change. Here are suggestions.
- Set goals. Receipt of a sum of money – such as a tax refund – is a good time to make financial resolutions, including improving your savings self-discipline. Start by deciding how much you want to accumulate and how long you have to do it.
- Save more money. Next, resolve to put money into a savings account on a regular basis. Consider automatic withdrawals from your paycheck or checking account to make this happen. You can also take advantage of tax-deferred retirement plans and employer-matched savings plans. This includes IRAs and retirement plans at work, such as SIMPLE and 401(k) plans. Using these plans to save may generate additional cash from the saver’s tax credit or an employer’s matching contribution.
- Control spending. Finally, resolve to be more prudent with expenditures. Establishing a spending budget is a good place to start. Watching your savings grow and knowing you’ll be able to pay for an important future goal is rewarding.