(Part 3 of a 3 part series on personal finance)  Link to Part 2:  Adopt Smart Saving Strategies

Put money away while paying off the balance on your zero-percent or low-interest rate credit card.  Figure out how much you’re saving from using this credit card, refinancing big-ticket bills, and sticking to a budget.  Designate this amount for savings.  Studies show that people are more likely to save if the money is deposited automatically.  Have your bank deposit this amount each week into two savings accounts:

1) An emergency fund, invested in a money market account. To find the highest-yielding rates, log on to bankrate.com or fidelity.com.  You will have to fill out an application online, authorizing the money market company to transfer funds from your bank each month.

2) A retirement fund, invested in stocks, bonds, mutual funds, or cash.  Log on to fidelity.com or vanguard.com to explore mutual fund options.  If you want to invest in individual stocks and bonds, log on to schwab.com or tdameritrade.com to set up a brokerage account.  Again, you’ll fill out an application online, and the company will take it from there, making sure that your bank transfers the funds electronically every pay period.  Even easier, if your employer has a 401(k) plan, talk with your benefits department about having a portion of each paycheck deposited into the plan.  Many employers will match your savings (up to a certain percentage).

Remember: Don’t tell yourself that saving just a little won’t make a difference.  You’re developing a habit – the longer you save something each month, the more likely you will be to continue doing it.  Increase your contributions to these accounts as you pay down your credit card debt and curb your spending habits.

Congratulations!  You are, finally, building wealth for your future.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Play Dough

Just because you’re saving doesn’t mean you can’t occasionally treat yourself.  Use this strategy to accumulate what I call “mad money.” 

• Empty your pockets or change purse every evening into a jar.
• Every month, bring your jar to a change-counting machine (the “Penny Arcades” at TD Bank branches won’t deduct a fee; most change machines at supermarkets withhold about 8 percent), and exchange your coins for bills.
• Keep your “mad money” in a separate envelope in your wallet.  Just knowing it’s there will help you discipline yourself not to “leak” money on small purchases that add up to big spending over the course of a month.
• Every once in a while, use your mad money to reward yourself for your new self-discipline.