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How can I start saving money?

Posted on 2/24/14 12:55:00 PM

In these tough economic times, there seems to be a glut of Americans who live paycheck to paycheck. And when you're spending the majority of the money you earn every month, that leaves very little room for any sort of savings plan.

But how can you start saving money if you just aren't making enough to even consider it?

The key is to keep it simple, according to financial advisor Steve Overton. In an interview with Richmond, Va. NBC affiliate WBBT, Overton said that there are a few starter plans that can make it easy to save, even for the most financially dubious.

One plan is to save $1 during the first week and increase that by a dollar ever week. For example, $1 in week one, $2 in week two, $3 in week three and so on. After a full year of increasing your weekly savings by $1 increments, you'll have nearly $1,400 piled up in your basic savings account to use as you will.

"If you're not a saver, this is a great, gimmicky way to remember to save," Overton said.

Don't be afraid to save or invest
For many Americans, the idea of saving money or investing can be intimidating. But you don't have to be an accountant or financial advisor to pad your bank account.

According to The Columbus Dispatch, saving early and often was cited by 56 percent of millionaires as the main reason for financial success. Making smart investments and controlling expenses was the next most common answer for financial success among millionaires, with 38 percent citing that as the major force behind their wealth.

"It's just a combination of working hard, a disciplined savings program, watching expenses and making sure to take advantage of all the opportunities from your employment retirement plan," Sue Bottiggi, a wealth management executive, told the Dispatch.

If you can only save a small amount each month, that's fine. Start small and set goals for yourself as you advance in the workplace. It's crucial to understand the sooner you start saving money, the easier it will be later in life to find financial stability.

How much to save?
Many people wonder how much they should be saving each month in order to get ahead of the ball. While there's not set amount the masses should to abide by, Overton gave an example of a good starting point.

"Half a week's pay per month is a great place to start," Overton said. "If you're making $500 a week, and you can save $250 a month, that's a great way to save - but there's no silver bullet or one size fits all with saving. Everyone's situation is different."

Overton also told WWBT about a money-saving option to use at the beginning of each month. He said that as soon as you receive your first check of the month, put some of that money aside for necessary expenses like food, transportation costs and housing fees.

"When you wake up in the morning, you have some savings," Overton said. "That's a far better deal than going, 'How am I going to pay this bill at the end of the month?' You choose how to live. If you save, it'll change your life."

Entertainment savings
Overton also said it's a good idea for some people to put money aside for entertainment costs. After all, you don't want to feel like you are depriving yourself by saving, and it's important to remember that you are investing in yourself and your family.

Another added bonus of saving money for some entertainment costs is that it might curb some of your spending habits. If you have an allotted amount of money to spend each month on going on out, you're more likely to stay within your limits and keep from blowing your paycheck on certain things that aren't necessary for your lifestyle.