Most people could do with trying to save a few dollars. If you are in debt then the imperative to save money is great and certainly urgent. Any savings can be automatically transferred to pay off your debt - which is a positive step to financial freedom.

IN PICTURES: How To Make Your First $1 Million

If you are not in debt you may be among the thousands of Americans who have absolutely no savings at all. The financial worries in the current economic climate might well be eased if there was a 'back-up' plan sitting in the bank.

If you had savings, it would cushion the difference between your income and your expenses, especially if you or a partner suddenly lost a job, for example. As a target, you should try to have three-to-six months income saved in an emergency fund. But how do you go about doing this? If every month you are counting the days until payday, it can be difficult to make cutbacks. Here we will outline five things that you can do straight away to start that savings fund

Consider reducing your 401(k) contributions and instead put that money away in savings. Continue to contribute enough money to your company's 401(k) to receive the matching contribution, if they offer it - but if you don't have sufficient cash savings, don't put in any more than that amount. Don't suspend 401(k) contributions altogether, because it's still tax-deferred savings, which is a big bonus. (Roth conversions will be available to affluent taxpayers in 2010. Will you benefit? Read The Simple Tax Math Of Roth Conversions.)

You Don't Miss What You Never Had
Siphon off a percentage of your salary at the start of the month into savings. In fact, some companies will allow you to make direct deposits from your paycheck into savings. Ask your employer if you can designate several accounts for your paycheck, and take advantage of this option. See if you can manage to save 10% of your monthly salary - you'll be surprised at how you'll get along without it.

Save the Extras
Do you have a tax rebate? Have you recently had a raise at work or received monetary gifts? Pretend you never received it - however large or small. You didn't have or need that money before, so don't depend on it now. Use an income tax refund, if you're fortunate enough to get one, as the start of your savings pot. Start seeing any extras as welcome additions to the savings fund.

Turn Off the lights
Get the whole family involved on a mission to decrease your electricity bill. Turn off the lights when you are not in the room, unplug the television and stop leaving things on standby, and you will notice the bill decrease. To really make a sizable saving - turn down your thermostat just two degrees and you could save thousands on your annual heating bill. For each degree you turn down the thermostat in the winter, you can save as much as 5% on your heating costs. (Learn more in Taking Your Home "Off The Grid") And remember don't spend this 5% saving - put it straight into the bank.

Get Bank Aware
Did you know that many banks are currently paying 0% on savings? If you don't know if your bank is one of them - you need to find out. Call them up right now and make the inquiry. If they are not paying you any interest on savings then you need to move banks. Many people are blindly loyal to their bank. Your bank is not loyal to you - if you are overdrawn or miss a payment, they are unlikely to consider your lengthy courtship.

Because banks are so keen for our business, they make switching to them very easy, and will often complete all of the paperwork and processes on your behalf. Do not have any savings sitting around and earning no interest whatsoever. (Get a better understanding of your account costs in 5 Bank Fees You May Not Know About.)

The Bottom Line
By starting today and following these steps, you can easily have one month's expenses saved before long. Once you have achieved this, you can take steps to getting three-to-six times this into that savings account. You'll be delighted you've done it.

Related Articles
  1. Retirement

    Suddenly Pushed into Retirement, How to Handle the Transition

    Adjusting to retirement can be challenging, but when it happens unexpectedly it can be downright difficult. Thankfully there are ways to successfully transition.
  2. Savings

    How Parents Can Help Adult Children Buy a Home

    Owning a home isn't easy thanks to stringent lending standards. Thankfully, there's ways parents can help their kids buy a home.
  3. Personal Finance

    How Tech Can Help with 3 Behavioral Finance Biases

    Even if you’re a finance or statistics expert, you’re not immune to common decision-making mistakes that can negatively impact your finances.
  4. Retirement

    4 Ways to Boost the Amount You Save for Retirement

    Retirement can easily last more than twenty years, which means you have to save a lot. Thankfully, there are ways to enhance the amount you put away.
  5. Credit & Loans

    Adjustable Rate Mortgage: What Happens When Interest Rates Go Up

    Adjustable rate mortgages can save borrowers money, but they can't go into it blind. In order to benefit from an ARM, you have to understand how it works.
  6. Retirement

    How to Stretch Your Retirement Savings

    What does "nest egg" mean for your personal situation? Will you deplete it, or will you nurture it to generate income that lasts throughout retirement?
  7. Savings

    Paycheck to Paycheck? Start Saving This Way

    The steps are simple; the execution not so much. But if you take some action toward your goal every single day, you'll see tangible results pretty swiftly.
  8. Retirement

    4 Reasons To Collect Social Security Payments Now

    The longer you wait to collect social security, the more you'll gain. But for people ailing in health or who need income, delaying isn't the best option.
  9. Retirement

    Can You Retire In Spain With $200,000 of Savings?

    How far will a modest nest egg take you in Spain? Here's a look at the cost of retiring on the Costa del Sol, or in one of Spain's culturally rich cities.
  10. Investing

    The Enormous Long-Term Cost of Holding Cash

    We take a look into how investors are still being impacted by the memory of the tech bubble and the advent of the last financial crisis.
  1. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  2. How is marginal propensity to save calculated?

    Marginal propensity to save is used in Keynesian macroeconomics to quantify the relationship between changes in income and ... Read Full Answer >>
  3. What is the importance of residual value in an automobile lease?

    The residual value of a car is often used by banks and auto dealerships to determine how much to charge per month for a lease. ... Read Full Answer >>
  4. When is an expense ratio considered high and when is it considered low?

    A number of factors determine when an expense ratio is relatively high or low, but a good, low expense ratio is generally ... Read Full Answer >>
  5. What is the difference between residual income and savings?

    Residual income, or recurring income, is income earned on a continuous basis for completed work. It differs from linear income, ... Read Full Answer >>
  6. What is the most effective way to write a successful budget?

    Before you begin writing a budget, gather all of your bank statements, bills and credit card statements for a given month. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center