Ben Franklin advised “a penny saved is a penny earned.” His simple guidance has provided the foundation for savings plans for many generations of Americans. Today his advice to save remains sound, but economic conditions and financial demands may have caused your savings to get off track.
Why save now? The answer is time. The earlier you put cash into a prudent savings plan, the more time can help increase its value.
Be honest with yourself. Have recent economic events slowed or stopped your savings efforts? Have constant changes in the tax law and the magnitude of investment choices added to your confusion? If your answer to either question is yes, it is probably time for both an attitude and a strategy change.
· Set goals. The first step toward a better financial situation is deciding how much you want to accumulate and how long you have to do it.
· Save more money. Next, resolve to put money into a savings account on a regular basis. Consider automatic withdrawals from your paycheck or checking account to make this happen.
Take advantage of tax-deferred retirement plans and employer-matched savings plans available to you. This includes IRAs and retirement plans at work, such as SIMPLE and 401(k) plans. Using these plans to save may generate additional cash from the new saver’s tax credit or an employer’s matching contribution.
· Control spending. Finally, resolve to be more prudent with expenditures. Establishing a spending budget is a good place to start.
Watching your savings grow and knowing you’ll be able to pay for an important future goal is rewarding. Put time on your side by adjusting your saving strategy now.
David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.