The U.S. Department of Labor’s Employee Benefits Security Administration offers at www.dol.gov/ebsa a booklet titled, “Savings Fitness: A Guide to Your Money and Your Financial Future.”
The booklet focuses on retirement savings, but it also provides general tips on improving savings. This column is the first of three exploring some of these general tips.
The agency suggests you “pay yourself first.” This means that the first thing to do when you receive a paycheck is set aside some cash as savings.
Automatic withdrawal to a bank or investment account is one way to do this, EBSA points out. “What you don’t see you don’t miss,” the agency emphasizes.
Consider putting bonuses or raises into savings.
Make regular savings a habit and evaluate the success of your savings plan every few months to be sure you are on track.
Try to avoid high debt since money paid in interest, late fees, etc., is money unavailable for savings and investment.
The agency indicates that some debt can be good, especially if it results in a financial payoff (e.g., buying a car for getting to work or paying to advance your career skills).
Nevertheless, try to avoid “bad debt.” This, the agency states, involves borrowing for things that don’t provide financial benefits or that don’t last as long as the loan.