Ramsey County

January 14, 2008

Small Steps to Wealth

          In an earlier news column, I shared some ideas for small steps to improving our health.  The concept of small steps adding up to make a large difference can also be applied to financial management. 

          Small daily expenditure for incidentals, which we feel make our lives easier, may add up to large sums of money when added together on a monthly, yearly or lifetime basis. Let’s say a young man or woman begins saving $1.50 a day on his/her 18^th birthday and continues with that saving effort until he/she retires at age 67.  Allowing for an 8 % interest rate on that savings account, our young saver will find $300,000 in that account when they retire.  Bump that $1.50 per day up to something more expensive, such as a pack of cigarettes and we are talking even more dollars in our savings account.

          Here are some saving strategies to get you started.

          - Pay yourself first. Make your “savings bill” a part of your spending plan, just like rent or utility bills. When you pay your other bills, pay your savings bill by depositing the money in your savings account.

          - Use payroll deductions. Have your employer deposit your savings directly from your paycheck into a credit union or savings account. If you never see it, you might not miss it.

          -Save “bonus” money. Try to save tax refunds, overtime pay, gift money, refunds and rebates and invest them for growth.

          - Pay installments to yourself. Once you pay off an installment loan continue to make payments by putting them into your savings account or invest the money.

          - Be a comparison shopper. Compare prices and quality at three stores before making a purchase.

          - Collect loose change. At the end of every week or more often, empty your pockets and wallet and put the change in ajar. Every other week, or once a month, deposit the change in your savings account.

          - Break a habit. Every time you don’t have a doughnut at coffee break or don’t spend money in the pop machine, save the money you didn’t spend. Sometimes we spend small amounts daily without thinking. Small purchases add up to big change.

          - Save lunch money.  After making your own lunch, deposit the money you would have spent on lunch into a savings account or that change jar.

          - Use a crash budget. A crash budget works just like a crash diet. You try to cut out all unnecessary spending, don’t buy on impulse and save as much as possible. This works especially well for short periods.

          - Use the “two-week” rule. If you want something, wait two weeks to get it. This will help you become an impulse saver, rather than an impulse buyer.

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524 4th Ave NE #5, 2nd Floor Ramsey County Courthouse
Devils Lake  ND  58301
701-662-7027
email - ramsey@ndsuext.nodak.edu