Saving For A Brighter Day

With less discretionary income, many Americans are wondering how to set aside cash for emergencies. Here are a few tips on how to squeeze the most value out of the money you make.

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  • STEP 6: Debts. List your debts, including mortgage, bank loans, and credit card debt.
  • STEP 7: Net worth. Add the assets, subtract your debts, and you have your net worth.
  • The Way to Save
    Now that you know how to track and control your spending, it’s time to start setting aside extra for the future. Of course, when we’ve told [people] this, many have said, “But I can barely live on what I make now!”

    One of the easiest ways to save is to trim your paycheck. Have your employer automatically deposit a portion of your paycheck directly into a separate account without the funds ever passing through your hands. Money that is deducted from your paycheck and deposited into a credit union account, savings or stock purchase plan, or government savings bond is money you are saving for the future.

    When you work overtime, don’t spend the extra income frivolously. It represents your leisure time, so save it for something you enjoy, or add it to your retirement account.

    It’s a Family Affair
    The spending plan you create will be a unique reflection of you and your habits, needs, and desires. If you’re creating a budget that affects other members of your household, you’ll need to win their allegiance before you set down the guidelines. Try not to impose too many stringent spending controls on family members at one time, or you may have a mass mutiny on your hands! To keep the peace, each member of your family should have some money that he or she can spend without being accountable to the budget. To allow for this, add an expense category to your spending plan called “individual allowances.”

    Budgeting 101
    A budget can help you get a handle on your finances. After all, if you don’t know where your money goes, you’ll live and spend from day to day with no clear idea of how much money is moving in and out of your accounts.

    Devising a budget may seem a daunting task, but it really isn’t that difficult. To help you figure it all out, follow these four simple steps:

    1: Create a worksheet so you can analyze where your money goes. Add budget categories that are uniquely yours: for example, if you are enrolled in school part time, you may have additional expenses for tuition payments, textbooks, and supplies.

    2: Figure out where your money has gone. Go through your checkbook and credit card statements for the past year and list each check or itemized credit card charge in its proper category. Add the amounts in each category, and you will have a summary of your spending by category for the past year.

    3: Create your budget for the coming year. Decide where you can cut back, and how much, and subtract the changes from the category totals. Divide the revised amounts by 12 to arrive at your preliminary monthly budget. Compare the total of all expenses with your monthly income, and adjust the expenses as necessary until your monthly budget equals your

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