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How Do You Save Money?
Sometimes the simple questions just need to be asked. How do you save money?
Do you automatically invest every month into a savings or investment account?
Do you keep whatever is left over at the end of each month in a savings account? Does the savings account have a good interest rate?
Do you plan to start saving as soon as you get out of debt?
Are you like many people in the United States who don't save anything and continue to fall further into debt each month?
How you answer this question is a good barometer of your financial health.
How are you doing?
Do you automatically invest every month into a savings or investment account?
Do you keep whatever is left over at the end of each month in a savings account? Does the savings account have a good interest rate?
Do you plan to start saving as soon as you get out of debt?
Are you like many people in the United States who don't save anything and continue to fall further into debt each month?
How you answer this question is a good barometer of your financial health.
How are you doing?
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Replies to This Discussion
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Permalink Reply by Tom McCann on -
I invest in a 401K account at work. Just the matching funds from my employer makes it a great investment. I also have automatic withdrawals each month putting money into a higher interest savings account. I use this account as an emergency fund and to make mutual fund investments.
Having the process automated is the key.
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Permalink Reply by James Scott on -
You're right that the matching funds are a great immediate return on your 401K investment decision. I like free money.
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Permalink Reply by Tom McCann on
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I know some people can't afford to contribute up to the matching fund amount, but for those who can, it should be a no brainer.
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Permalink Reply by kimber on -
I am big into automatic everything (bill pay, transfer to savings, auto-deposit from my employer, etc.)! I auto-save via my 401(k) at work (pre-tax dollars!) and also sock away about $500 post-tax with an automatic transfer from my checking account to my savings account each month right after I'm paid. This money is helping me now that I'm on maternity leave without pay and property taxes were due. I'm glad I did the automatic route because otherwise it can be difficult to have the discipline to make manual transfers each month. Also, when you don't have to think about saving all the time, you don't even really miss the money! It's like you never had it in your hands to begin with and it is working wonders on your future financial health.
As for paying off debt vs. saving, I think it is important to do both simultaneously. Financial author, Robert Kiyosaki, taught me the value of paying myself first -- if you pay your creditors, utilities, etc, first, you may not have any left over for yourself. And how else will you ever get to retirement if you don't pay yourself? Fortunately, I no longer have any debt (other than my home mortgage, which I consider more of an investment anyway), so all my "extra" money can go straight to savings and investments. But to get to that point, I paid more than the minimum due on my credit cards, car, and student loans -- at least double each time. At the same time, I was maxing out my 401(k) contributions and attempting to max out my Roth IRA contributions each year. Now I am debt-free and loving it! I feel confident in my future financial stability and can sleep well at night knowing that my family will be secure. And going forward, I have vowed to do my best to pay for things in cash and/or pay off my full credit card balance each month. This mindset helps me to live within or below my means -- a key factor in a person's ability to save enough for their future goals.
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Permalink Reply by James Scott on
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Sounds like you have a good financial plan and history. I wish I would have started the automatic withdrawal thing about 10 years ago because thinking I would do it on my own has been a disaster for my finances. There was always something I needed/wanted to spend money on. Making my investments the firsr deduction rather than the last deduction from my account has really changed things for me.
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Permalink Reply by kimber on
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great - good for you! isn't it a good feeling to know that all your hard work is benefiting your future now, and not just satisfying your creditors? when you save for yourself first, you're less likely to waste your disposable income on "wants" that either don't please you for very long or are disposable themselves (impulse purchases, convenience foods/items, etc.). for me, once i started to view each and every dollar as a tool that could help me reach my future financial goals (earning interest via investments), i really changed my spending habits. now i think of the one-dollar bill as a little sapling that could grow into a future money tree. and do i really want to spend 3 saplings on a lousy cup of gourmet coffee? not any more. keep up the good habits!
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Permalink Reply by Tom McCann on
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Most people have no idea how much those three dollar cups of coffee are costing them.
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Permalink Reply by Willie on
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I feel like I'm doing a pretty good job with my investments, but I need to focus on maintaining a good emergency fund. I've been through a few rough patches in life and having some money available for employment transitions or a sickness is very helpful.
Reading your comments about automatic withdrawals into a savings account has me motivated to set something up. My emergency fund won't grow unless I start saving some money. I've proved over the last year that constantly reminding myself to create a larger emergency fund won't get the job done. Time to take the next step and actually start saving.
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Permalink Reply by Tom McCann on
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Hi Willie
I set-up an automatic savings plan to fund an emergency account. I only had to think about it once and now my emergency fund is pretty healthy. My main goal now is to only take money out of the account for "real" emergencies. So no travel, toys, or entertainment spending can come from that account.
I'm glad I set-up a separate account for the emergency fund.
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Thanks for the information and motivation. I just set up my separate emergency fund account with automatic withdrawals going into it.
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Permalink Reply by Tom McCann on
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Good job Willie!
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