Cut spending painlessly.
Tip 1: To find small savings that add up to big savings over time, keep a careful record of all of your expenditures for a month. You may be surprised to learn how much you are spending on such things as a daily latte or restaurant meals.
Tip 2: For necessary purchases, such as food, transportation and insurance, comparison shop. The Consumer Literacy Consortium (www.66ways.org) provides good advice from leading consumer experts on how to save money purchasing 28 types of major products.
Tip 3: Restrain spending for birthdays and holidays. A few well-chosen gifts are likely to be more appreciated than a more costly pile of gifts chosen thoughtlessly in a shopping mall foray.
Reduce high-cost debt.
Tip 4: Payday loans typically charge interest rates of 500 percent, and the interest rate on credit card debts can run 25 percent. You can save hundreds, perhaps thousands, of dollars a year by paying off these high-cost debts. For help, contact a credible nonprofit credit counseling agency.
Tip 5: Build an emergency fund to avoid having to take loans to pay for unexpected purchases. That fund is usually best kept in a savings account, despite the low interest rates. Such accounts pay right now. Try to keep a high enough balance in the account to avoid monthly fees.
Tip 6: Ask your bank or credit union to automatically transfer funds each month from your checking to your savings account. Even as little as $10 or $15 a month helps.
Tip 7: Put all your loose change in this savings account. For many people, that could add up to more than $100 a year.
Take free money and save it.
Tip 8: Low- and moderate-income workers qualify each year for an Earned Income Tax Credit (EITC) that can give them more than $1,000 and often more than $2,000. IRS Publication 596 explains how to apply, or you can contact your local taxpayer assistance center for help. Save at least half of this windfall.
Tip 9: Participate in a local Investment Development Account (IDA) program. In return for attending financial education sessions and agreeing to save for a home, education or business, you typically receive $2 for every $1 you save through an IDA program. For instance, by participating with just $25 each month ends up as $900 at the end of a year. Dial 211 to find out how to open your IDA account.
Tip 10: If your employer matches retirement savings contributions, take advantage of that. Some employers match up to 100 percent of your contributions. While letting this money build up until retirement is recommended, it can be withdrawn or borrowed on to cope with serious emergencies.
Ruth Brock, regional Extension agent, Consumer Sciences and Personal Financial Management, Alabama Cooperative Extension System.
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