Abraham Lincoln
is credited with saying, “A goal properly set is halfway reached.” America Saves Week is February 24-March
1. This month is a great time to
properly set a goal for your personal or family savings. Now is the time to take action and put into
practice the theme of America Saves Week:
Set a Goal. Make a Plan. Save Automatically. One easy way to get started is to log onto www.americasavesweek.org and pledge
a savings goal. Those with a savings plan are twice as
likely to save for emergencies and retirement as those without a plan. When you
take the pledge you can also choose to receive text message tips and reminders
to help you save for your goal.
As I’ve studied
different personal financial management strategies, one of the tips I’ve run
across is to do something each day related to your personal finance. In essence, keep it on your mind and keep the
goal in front of you. I signed up at
America Saves and have been receiving email and text reminders, which help keep
my goals in front of me. It is easy to
get sidetracked in today’s world that is always marketing some new product,
service, or opportunity. It is nice to
receive reminders that keep me on track for limiting my expenses, thereby
allowing me to save some money. Even if
you can only save a modest amount of $10 or so, it is developing the habit that
is important. Many of us, even on a very
limited budget, can find ways to live more frugally and find a little bit of
money to set aside to start reaching goals.
Last weekend as I
worked on preparing our taxes, I checked our average monthly spending in
several categories. I’m convinced that
we could probably “tighten the belt” in a few areas. Actually, one of the expenses categories that
surprised me was food. I suppose we
could literally tighten our belts if we bought and ate less food!
Speaking of
taxes, here are a few ideas from John Gower and the America Saves website: Each
year, about 75% of Americans who file tax returns receive a refund. According
to the National Foundation for Credit Counseling (NFCC), more than half of
those receiving refunds (58%) intentionally plan it that way. So if you are a
member of the group that’s been giving Uncle Sam an interest-free loan every year,
what are you going to do with that money? Spend it? The average
refund is about $3,000. That’s a serious chunk of change that would
be better put to use in other ways. Here are a few ways to spend your tax
refund that will improve your personal finances far more than a new purchase.
Pay off credit
card or other consumer debt. If you cannot pay it all off, making a substantial
payment will still lower your future monthly payments considerably. If you have
more than one credit card to pay, pay the one with the highest interest rate
first. Or, if your credit cards are under control, plunk down a big payment on
your car or your mortgage.
Build up an emergency fund. Experts
recommend setting aside at minimum enough to live on for six months, or a year
if you have a family. This is money that should be kept accessible, so you can
tap into it if you have unanticipated big expenses for home repair, medical
care, or you find yourself suddenly unemployed.
(I think that people who are barely making ends meet find it
discouraging to think of putting away six-twelve months of income; but remember
what I said earlier – even $10 a month is a habit worth working toward. Eventually, you may be able to save more,
especially if you start by putting your tax refund away each year into an
emergency fund. It may not be as fun as
a new big screen TV, but when the furnace breaks down, you’ll be glad you did
it.)
Fund your retirement. Start or add to your IRA or 401(k).
IRAs and 401k plans are opportunities to put aside money now for retirement
purposes. Since these plans are tax-advantaged, they are even more valuable
than a typical savings or investment account. So if you’ve been avoiding
retirement contributions lately, or have not even started a retirement plan
yet, you could use your tax refund to turn that around in 2014.
Remember, a goal well set is half way met!
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