The next major step on the road to financial well-being is to start saving to reach your goals.  To take that step, you must to accomplish one simple task each month:

Spend less than you make.

“Easier said than done!” you may think.  It is true that Americans in general are horrible at saving.  However, our generation needs to make a change.  Your retirement lays on your shoulders; no company pension will bail you out.  Rising healthcare costs mean that the chances of an accident or illness costing you dollars out of pocket is higher than ever. 

However, you can easily protect your future by saving money each month.  What’s more, saving is not nearly as difficult as most people believe.  There are two methods that you should use that will make saving for any goal relatively painless:

1.  Treat savings as a fixed expense.

Each month, you pay your rent or mortgage, student loans, credit card bills, telephone bill, cable bill, utilities…  I want you to add savings to that list.  How much you need to save each month depends on the goals that you will be saving for - but for now, let’s start with 10% of your earnings.  In other words, if you make $2,000 per month, move $200 each month into your savings account.  You may notice the reduction in your “disposable income” for the first month or so, but after that you will adjust your spending habits without even realizing it. 

2.  Automate your savings.

To make your monthly savings even easier, set up automatic transfers each month from your checking account into your savings account.  Or better yet, have a portion of your paychecks deposited directly into your savings account.  Saving is much easier when you do not actually have to do anything to save, on the contrary, you have to take action not to save.  This way, you are much more likely to actually put away some of your hard-earned dollars.

Action Items:

• Spend less than you make by treating savings as a fixed expense.
• Set up an automatic transfer from checking to savings of 10% of your earnings each month, or by having a portion of your paycheck automatically deposited into your savings account.