Start the NEW YEAR with Savings!

Monday, December 31, 2007
Start the NEW YEAR with Savings!
Time for those New Year Resolutions! Take time to resolve to manage your personal finances better in 2008.

So I mentioned earlier that the first step for most people is to save money - most planners recommend anywhere from 2 to 6 months of your salary stashed away in a liquid savings account. This would be for emergencies (like losing a job or medical) or for your savings goals (like a new car or vacation).

Now most people don't have 6 months of salary sitting in their checking account, especially those starting off right from college so here's the easiest way to go about saving money:

Open a savings account with an online bank (I use ING Direct) with as little as $100. Online banks pay much higher rates than normal banks because of their lower overhead. This also allows you to "link" your checking account to your online savings account and establish an automatic transfer. ING lets you do any amount daily, weekly, monthly, or quarterly. You can also do 1-time transfers.

If your goal is to have 6 months of salary saved up by the end of 1 year, then set your automatic transfer to be 1/24th of your salary every month (when you get paid).

I recommend setting up the transfer on whatever day you get paid - so if you're paid weekly, you would have weekly transfers; monthly - monthly, etc. This way you're PAYING YOURSELF FIRST before you spend it!

Of course, if your budget doesn't allow this, then you should take a good look at your spending habits, your earning potential, and then transfer whatever you can with a goal to increase it. The point is to START!
Source:moneywiseguy