A consistent approach to personal savings is fundamental to
a healthy personal finance plan. You will find that by
including savings in your budget that you reduce your
chances of getting into overwhelming debt that so many find
themselves in today. These people in the overwhelming debt
are those who never learned to save for what they want
instead of using credit only as a tool to purchase
high-priced items that would be out of a person's reach
otherwise (such as a home or car). But whether you are in
debt or just starting out and have no debt, you should
start a savings plan.
For those already caught in the grips of debt and using
their credit cards to handle those unplanned expenses, you
need to cease that kind of spending now. By opening a
savings account and depositing just a little each time you
are paid you will see it add up over time and it will be a
great reserve for when you do have those unplanned
expenses. Can you put aside $10 every time you get paid?
Can you set aside more? The amount is not as important as
getting you into the habit of saving and making it part of
your personal financial plan.
Saving will be hard to get used to at first if you are in
the habit of using credit cards. Bad habits are very hard
to break. One thing you can try and it can be a great
motivator is to take what money is freed up after paying
down credit cards and putting it into savings. For example,
let's say your minimum payments on credit cards each month
totals to $200. So you decide it's time to get out of debt
and you start paying extra on the credit cards and then the
next thing you know, the monthly payments total to $150.00.
You can set aside the $50 in your savings account and in
some ways you never miss it because you were accustomed to
paying $200 each month. And the money builds in a cash
asset account that you can get access to if you have an
emergency instead of using the credit card.
401K and 403B savings plans offered by your employer are
also good ways to save. The advantage here is that your
employer will typically match up to a certain percentage of
what you contribute so it's in a way like free money.
Contribution to the plan is typically handled by payroll
deduction so in a sense what you never see, you never miss.
These plans also, for the most part, yield much higher
rates of return because your funds are invested in the
stock market or mutual funds. But this type of savings is
normally not used for short term emergency expenses as
withdrawal comes with penalties and tax implications. These
plans are used mostly for retirement savings.
Avoid making deposits into your savings account that are so
large that you have to later go back and withdraw a portion
of it to cover living expenses. Just start small and build
it over time and soon you can get yourself off of credit
card dependency and build a valuable asset.
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My name is Tom Husnik. I live in Minnesota. My web site is
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