Fortunately, there are ways to get a head start on your future financial success. Here are four of them.

1.  Build an Emergency Fund

One of the best ways to guard against an unforeseen emergency, larger-than-life medical expenses, or the loss of your job (or any crisis that requires a large sum of cash) is to create an emergency fund. In it’s most basic form, an emergency fund is a sum of money saved up and earmarked only for emergencies – true emergencies.

Expert suggestions about the amount of money needed for an emergency fund range from covering one month of necessary expenses to covering six to nine months of necessary expenses. Whatever range you choose, you should also decide how you define “necessary expense” – things like rent or mortgage, utilities, and groceries.

Repeat these words: credit cards are not to be used for emergency funds. An emergency fund should consist of saved income, not credit. If you use a credit card as an emergency fund, you’ll end up creating a future emergency.

2.  Pay Down Your Debt

One of the most interesting, and un-winnable, arguments within the personal finance world is the questions about what should come first – saving up an emergency fund or paying off your debt? No matter what the answer may be, the important thing to remember is that both are pillars of a successful financial future.

Paying off your debt keeps more of your money in your bank account – over the long term. The faster you pay down your debt, the less interest you pay and therefore you keep more of your hard earned cash. But the reason so many people keep putting it off is that, over the short term, paying off your debt faster feels like you’re losing more of your money.

When you pay off your debt faster, more of your income goes toward paying everything off. So yes, you might have less disposable income. But it’s only for a short while. Once that debt has been paid, there’s no more debt! And you’ve saved potentially thousands of dollars by avoiding long-term interest payments.

3.  Watch Where Your Money Goes

Know what you spend your money on and be able to control that spending. Just because you have a shiny new job doesn’t necessarily mean that you need a shiny new car, or a shiny new home theater, or a shiny new wardrobe.

And just because the CEO of your company spends money like it’s going out of style doesn’t mean you have to mirror his/her spending practices. So the value of your car is tens of thousands of dollars below the bosses car, that’s okay. It takes time, and wise decision making, to build wealth.

And remember, it’s never too early to start saving for retirement.

4.  Invest in Yourself

The last bit of financial advice to help you gain a head start on your financial future is this: don’t forget about yourself. Yes, you should be smart with your money. Yes, you should be interested in your company’s 401k program or a personal IRA. Yes, you should start a savings account. And yes you should, as so many personal finance experts trumpet, pay yourself.

Don’t forget to invest in yourself. Drive cheap cars for a while so you can save up that monthly new car payment. In a few years, you can start paying cash for your vehicles and empty the money you save into a sweet IRA or mutual fund.

Continue to learn and grow and be educated about all things personal finance. Remember, it’s not about being the wealthiest person on the planet, it’s about securing your financial future – for you and your family.

For example, one of the goals we have is for our little one be financially savvy with her money when it comes time for her to move out.

Raise a Super Saver

Here are five ways parents have successfully gotten their kids into saving their money.

1.  Match their savings: Low interest rates can be great if you want to refinance a loan, but it’s terrible for savers, especially young ones. With banks paying pitiful rates right now, parents might want to boost the return on the account by offering a match. Depending on their age, you perhaps may do a 1 to 1 match with their contributions. If they are older and can save a bit more, you can still choose to create an incentive by giving a bonus on a monthly or quarterly basis.

2.  Have them be a part of the team: This year for the family vacation perhaps you can involve your kids with the spending plans. Everyone one who pitches in the pot can have a special activity planned. Perhaps your little one can save up for an ice cream shop visit after visiting the park. Plan ahead and help them to see how much certain activities cost. Perhaps the kids can team up for a common goal – a win-win for the family.

3.  Make it a contest: If your child loves to compete, having a contest with a prize at the end can help  show him or her the value of saving for long term goals. If they save up enough for a video game console, like an Xbox by a certain date that you two choose, then offer to get them a game or additional controller.

4.  Keep it visual: Let’s be honest – saving money at the bank isn’t the most exciting thing for kids. Help them out by having a visual reminder of the progress they’re making, perhaps a chart or poster of what they are saving up for along with their current savings.

5.  Set the example: This is the best way to encourage your kids to save – lead by example. Whether it’s saving for a car, their college fund, or your next vacation, show them that you save as part of your money routine and it’ll be easier for them to follow.

Right now we’re saving our little one’s small savings in an online bank. When she gets older we’ll work with her on using her money to reach her goals.

Thoughts on Kids and Savings

For all the parents reading this, what has worked well for you and your family when it comes to getting your kids to save?

This isn’t a tax benefit that you’d take on your tax return, but a benefit that avoids tax up front by providing employees savings on their daily commute to work through pre-tax (federal and FICA) payroll deductions.

First, the de minimus transportation benefit. “De minimus” is Latin for “about minimal things” and when the IRS uses the term, they are stating there are some matters that are deemed too small to worry about for tax purposes. In this case, we’re talking about the occasional transportation benefit that an employee might get when working overtime, such as cab fare to get home safely.

Next are the four Qualified Transportation Benefits.

Regular transportation in a commuter highway vehicle – This is similar to carpooling, only the employer is providing the ride every day. The vehicle needs to seat six or more passengers and regularly run more than half full to qualify. 80% of the miles must be driven between worker’s homes and the workplace, presumably to avoid personal detour requests. In congested cities this is a great way to be green, provide a bit of employee camaraderie, and save the employees some money with no tax consequences.

Transit Passes – This includes a pass (e.g. the Metrocard) to get you on your local mass transit system, or let you hop onto to a van service to get you to work. Note: There is a $245 per month limit for combined commuter highway vehicle transportation and transit passes.  Transit may include bus, ferry, rail, and vanpool.

Qualified parking – If there’s no on-site free parking, your company might provide for a paid spot near or at your office building. Qualified parking also includes the fees you’d pay to park your car at the commuter rail, mass transit, or the lot where that commuter highway vehicle picks you up. This benefit is tax free to you for up to $245 per month and is in addition to the $245 limit discussed prior.

How about really green? Your employer can reimburse up to $20 per month toward the purchase of a bicycle, as well as cost of repairs, improvements, and storage. The ‘qualified bicycle commuting months’ are only those months for which the other three Qualified Transportation Benefits are not received.

In a sense, this is an invisible benefit.  So long as the value involved does exceed the limits discussed, you won’t see this listed as taxable income on you W2 at year end. Your wallet still enjoys the savings as these numbers can add up to $5880 that wont be taxed when you file your return.  And the planet will thank you for burning a bit less gas in the process.

Below, we explore several different approaches to savings (and the pros and cons of each) to help you pick the right one.

Sporadic Savings

Sporadic savings is the default approach of most individuals. In lieu of any specific plan or system, they simply put various amounts of money away at random times when it’s convenient. There are any number of reasons why this is not the ideal approach. Over the long term, it is sabotaged by human nature, our reluctance to delay gratification, and the overall lack of consistency inherent in the approach.

That said, there are some people who would be well-served by sporadic savings. For those with irregular or unpredictable income (say, freelancers) putting money away randomly is infinitely better than not saving at all. Likewise, individuals living paycheck-to-paycheck on extremely tight budgets should certainly save when they can if the only other option is not saving. That said, sporadic savings should be seen as a temporary “stopgap” solution, used only to tide you over until you have steadier income.

Scheduled Savings

The polar opposite of sporadic savings is scheduled savings. As the name implies, this refers to any savings system that is automated, such that a fixed amount of money is being saved each month or pay period. This approach is vastly superior because it removes guesswork and volition from the process. Essentially, savings comes to mirror an assembly line that functions like clockwork to gradually build your wealth.

Scheduled savings is ideal for anyone whose income is both steady and sizeable. If you have excess cash left over after paying your routine bills (and other obligations like retirement, investments, etc.) then you are a prime candidate to set up an automated savings transfer at your bank and let it work for you.

Purpose-Driven Savings

Purpose-driven savings is a hybrid approach. Its defining feature is not the regularity or the amount of savings—depending on the person, these could vary. Rather, purpose-driven savings is about why you save. Very simply, not everyone is motivated by the abstract goal of “savings.” To them, the typical reasons for saving (security, stability, etc.) are just obstacles to buying what they want right now. Instead, these people are much more likely to put money away for specific and compelling reasons: a down payment on their dream home, or their college tuition, for instance.

With purpose-driven savings, your goal is so powerful and appealing that simply thinking about it is enough to make you sacrifice for it. This overcomes the lack of intrinsic motivation to just “save” for its own sake.

The Envelope System

Another solid option for those who find themselves lacking in natural motivation to save is the envelope system. This approach works because of its simplicity. Each month, you decide how much you are willing to spend in each area of your life: bills, entertainment, food, etc.

After doing so, you put those amounts in envelopes that belong to each category. Once you spend each envelope’s contents, you are prohibited from spending anything more in that category until you get paid again and replenish it.

The envelope system is best suited to those who are not naturally “wired” to handle their money. Instead of forcing themselves to mentally juggle their money and responsibilities, the envelopes spell out their spending decisions for them, allowing you to buy whatever you want in each category as long as you only spend the allotted amount.

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No Money for Your IRA Contributions?

With those tax benefits, you’d think that most people would  be aggressively contributing to their IRAs. However how many people actually maximize their contributions (currently it’s $5000/year)? Why is that the case?

One of the biggest obstacles I hear from people about why they are not contributing money into an IRA is that they don’t have the extra money in their budget. With budgets already tight, they feel like retirement contributions are out of the question.

The good news is that you can make some adjustments to your budget that will help you save for later without drastically sacrificing your budget now.

Finding Money in Your Budget

If you’re looking to jump start or increase your retirement contributions, here are some big ways to find money in your budget.

• Proper Withholding on Paychecks: If you haven’t reviewed your w-4 in awhile, you may want to look at it again. When it comes to withholding on your wages, you could optimize your finances by simply adjusting to what could work best for you. For some, being conservative with their withholding means they can get a bigger refund come tax time, which they can immediately use to fund their IRAs in one swoop. For others, getting more money in their paychecks throughout the years can be the right choice as they set up automatic contributions to keep them on point.
• Take a Week to Shop Insurance: Sometimes we can get into a comfortable habit of staying with the same insurance company simply because we’re used to dealing with them. There’s nothing wrong with being loyal to a good company, just make sure you’re getting value for your loyalty. For us, switching car insurance has cut our premiums by almost half. For my mother, calling around got her current insurance company to lower her bill.
• Consolidate Student Loans: If you qualify for lower rates with a student loan consolidation, you should seriously check it out and run the numbers. The money saved can then be redirected towards your IRA.

None of these adjustments will hamper your budget now, yet they can save you a good amount of money. If possible, once you make the change set up an automatic contribution to your IRA so you can stay on target.

Thoughts on Funding an IRA

I’d love to hear from you about your retirement contributions. How did you find money to contribute to your IRA? What has been the easiest adjustment you’ve made? What has been the hardest?

Build Your Nest Egg and Save on Your Taxes

Don’t ignore the tax benefits of building a nest egg. A 401k and traditional IRA will give you a tax break today by allowing contributions to be considered tax deductions.

You may be getting ready to file your taxes before the April 15th deadline.  You can still make a contribution of up to $5,000 to your IRA ($6,000 if over 50) by the tax deadline and take a tax deduction for the contribution on your 2012 taxes.  You can build your nest egg and at the same time keep more of your hard-earned money.

If you opt for a Roth IRA you won’t see a tax break today, but qualified withdrawals in the future will come out tax free. If Uncle Sam is going to provide a benefit for saving money, take advantage of it.

Use Your Tax Refund to Build Your Nest Egg

After you file your taxes and find out you’re getting a tax refund, you can contribute some of your tax refund to your IRA and get a head start on tax savings for next tax year while growing your retirement.

Contribute a Little More

If you have a 401k at work or you opened up an IRA these vehicles are a great start, and if you’re already contributing something, that’s all the better. The thing is, you can always do more. Chances are you aren’t maxing out your 401k so there’s room for improvement.

You may be thinking that there’s simply no way you can afford to put more away, and it’s true that money is tight in this economy. But you don’t have to feel like you’re taking on another mortgage payment just to boost your retirement savings.

Start small. For example, if you’re currently contributing $200 a month, bump it up to $250. 50 extra dollars a month doesn’t seem like it will help, but over the long run it can be a big difference. Just the extra 50 bucks a month over the next 25 years tucked away in your retirement account will likely add up to $30,000 or more.

Whether you bump up your contributions 20 dollars a month or 200 dollars a month, the idea is to make it a habit every year. When you make a small bump to your monthly contributions your budget won’t take a noticeable hit.

Sure, you might feel the pinch initially, but it doesn’t take long before your spending adjusts and you completely forget about the extra money you’re putting into your nest egg. Now, if you make the same small increase each year it won’t take long before you’re putting a lot of money away toward retirement and you don’t even realize it. You will be thanking yourself when it comes time to rely on that money.

If you aren’t currently building up your nest egg with a 401k, IRA, or even just a savings account, now is a perfect time to start. Just like the advice above about starting small, that’s probably how you’ll want to start for the first time.

If you can’t afford to max out an IRA right now that’s perfectly fine and nothing to be ashamed about. Start with 25 or 50 dollars a month. Sure, that alone won’t give you the retirement of your dreams, but we’re just trying to build a foundation and get into the habit of saving.

Over time you will increase your contributions and it all adds up. Remember, every day that passes is one less day you have to save. You can’t get that time back, so save something, anything, and it will pay big dividends and help you save on your taxes.

Above all else, try to come up with a plan for the tax refund money before you even receive it. One of the worst things that can happen is you don’t have a specific goal in place for the money and it just gets deposited into your checking account.

It sits there and slowly, day by day, you chip away at the money without even realizing it. A few months later it’s gone and you’re not even sure where it went. So, don’t let this happen to you and come up with a use for the money before you have a chance to spend it.

Knock Down Debt

If I told you about an investment that had a guaranteed return of 15-30 percent or more, you’d probably view that as a little pot of gold and would like to invest, right? Well, if you carry a balance on a credit card, you can achieve these rates of return easily.

Most credit cards have an annual rate of anywhere from around 12 percent all the way up to 30 in some cases. Any balance you leave on that card will rack up those finance charges. For example, carrying a $2,500 balance on a card with a 25% APR will cost you $625 in interest a year!

That’s a lot of money being spent on nothing but the privilege of using a credit card and not paying it off right away. So, if you’re getting a tax refund this year and you’re carrying any high-interest credit card debt, one of the best things you can do is to use it to pay down the debt. It’s the easiest way to generate your own personal pot of gold even if you don’t see the total benefit immediately.

Padding Your Golden Years

What if you don’t carry credit card debt? There are still a few good uses for that tax refund. Chances are you haven’t been maxing out your IRA or 401k, and that’s OK. It’s difficult to fully fund these accounts with so many other financial obligations, but it’s something that should not be overlooked or pushed to the back burner just because retirement may be a few decades away.

If there’s tax refund money coming your way, consider dumping it right into an IRA or bump up your 401k contribution at work to make up for the extra money. If you thought paying off a credit card with a tax refund provided a good rate of return, you haven’t seen anything yet. Take that $2,500 tax refund and stick it into your retirement account. Even if you only see a modest return of around 5 percent a year, this year’s tax return would turn into a $8,500 pot of gold in about 25 years.

That may not seem like a lot, but what happens if you take your $2,500 tax refund each year and do the same thing? Now you’re thinking. If you did this, in 25 years your pot of retirement gold would be over $130,000. Think about that for a minute. All you’re doing is taking your tax refund money, that typically gets spent on odds and ends, and significantly padding your nest egg with virtually no effort.

Have a Little Fun

Paying down debt, saving for retirement, or building an emergency fund are not exactly the most exciting things to do with your tax refund money, but the results over time are more than worth it. If your financial house is pretty much in order already, then having a little fun with the money isn’t a bad idea if done right.

Instead of blowing it on a new laptop, television, or other gadget that will be thrown to the curb in a few years, think about long-lasting lifestyle upgrades like making sensible home improvements, which will not only provide enjoyment while you’re living there, but can increase the value of your home, which can put more money in your pocket when it’s time to sell.

Haven’t Filed?  You Can Still File so You Can Get Your Pot of Gold

If you haven’t filed your taxes yet you can still file so you can get your tax refund.  TurboTax will help you get the tax deductions and credits you deserve and help you keep more of your hard-earned money and turn it into a pot of gold.

The Fiscal Cliff is behind us, an agreement to avoid the cliff was codified in the American Taxpayer Relief Act (ATRA). Among the golden nuggets within ATRA were the extensions of particular tax credits relating to Energy-Efficient Improvements to your home to help you save more of your hard-earned money.

First, let’s look at the improvements that qualify, starting with the items that fall under the Residential Energy Efficient Property Credit:

• Solar Electric (i.e. Photovoltaic Panels)
• Solar Water Heating
• Small Wind Energy (Windmills)
• Geothermal Heat Pumps.
• Fuel Cells

Expenses for the above items are applicable to either your main home or your vacation home, with fuel cell being the single exception, main home only.  In addition fuel cells are limited to 30% of cost up to $500.

A 30% credit is available for any or all of the above improvements whether they are added to an existing home or at the time of construction of a new home. Keep in mind the difference between a Tax Credit and a Tax Deduction. Put simply, the tax credit is like a cash discount on the item purchased. Drop $10,000 on a solar panel installation, and Uncle Sam hands you back $3000 tax credit. Additional rebates are available on a state-by-state basis. To learn more about the benefits your state offers, the Database of State Incentives for Renewables & Efficiency, funded by the Department of Energy, will help you find the details. These credits are currently scheduled to be available through 2016.

The next group of improvements fall under The Nonbusiness Energy Property Credit. This tax credit is more limited than the Residential Energy Efficient Property Credit. It’s capped at a $500 credit total for all years from 2005 through 2013. It includes expenses for the following qualified energy efficiency improvements:

• Insulation or any system designed to reduce heat loss
• Exterior Doors
• A metal roof designed to reflect heat
• Exterior Windows

The next category of credit worthy items are residential energy property costs. These include:

• Central Air Conditioners
• Gas, propane, or oil furnaces and qualified natural gas, propane, or hot water boilers.
• Advanced main circulating fans for the systems included in this group.

You don’t need to worry about which types of purchases apply to a given credit.  TurboTax figures out which tax credit your eligible for. Back in 2010, I was finishing my basement, and part of the process was to have professionals install solid foam insulation against the foundation.

Of course, I had been saving all my receipts for material as I went along as this would be added to my home’s cost basis, but what a pleasant surprise I had while working on my return for the year. TurboTax asked me if I had these expenses and gave me the appropriate tax credit and put $1500 back in my pocket.

Daylight Savings Time is here and you can save money by using less electricity, but if you made energy efficient improvements don’t forget to have your receipts ready when you prepare your taxes so you can take these tax credits and save more green this tax season.

The Non-business Energy Property Credits are scheduled to last through 2013, so if you’ve not taken advantage of these and used up your potential credits, you might consider doing so this year. You’ll get a bit of a tax refund and the chance to save on your energy bills in the years to come.

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Do you have any tips for saving this holiday season?  We’d love to hear yours.

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DIY costumes can be the most fun creative costumes at any Halloween party.  What Halloween costume will you make?

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Here are the second five of ten easy strategies to increase your savings level without becoming cheap.  The first five are posted here.

Savings

 Strategy 6:  Enjoy being with people you like.

Your friends make the evening enjoyable—not the menu design or the lighting where you meet. When a few friends suggest meeting for dinner, it’s perfectly fine to suggest a place you loved when you had less money.  That place is probably less expensive than the trendy yuppie restaurant that just opened. Many of your friends (but not all) will be thrilled to spend $15 on the evening’s food rather than $35.  They just lack the courage to propose an alternative to the comparatively free-spending organizers.  Don’t be surprised if one or two of your friends thanks you for your suggestion—in private.

Strategy 7:  Don’t blow off the recurring minor.

Small recurring expenses aren’t truly minor. Examples include your cable bill, your cell phone plan, and your morning coffee.  Estimate the cost of such expenses for a full year. Are you comfortable with that level of spending?

There is no right or wrong answer here—it’s a personal decision. Some people need their coffee every morning and it’s something they look forward to from the moment they wake up.  But other people spend $5 every weekday morning ($1,300 annually) just to delay getting to the office for another few minutes.

Regardless, don’t try to change all your habits at once, but see if you can find at least one minor recurring expense to cut.  Perhaps lose the premium cable channel you never actually watch.  Or switch to a lower minutes­­–per-month cell phone plan.  Minor expenses aren’t really minor if they last a long time.

Strategy 8:  Spend with comfort on items or experiences you value highly.

As with time management, you cannot prioritize all financial desires as “highly important.”  Life requires choices. Not prioritizing your spending is itself a choice.  Often, the result is giving up control, because you run out of money at an inopportune time.

A better approach is to prioritize your desires.  When you know what you truly value, you can spend on those things with no guilt. Enjoy! Sacrifice what is not important to you. Few people have enough money for unlimited discretionary expenses, and you are not one of those people.  So enjoy whatever you value highly and limit the discretionary expenses you do not.

Strategy 9:  You won’t spend what you don’t see.

Think about a friend with a similar lifestyle who makes 10 percent more than you.  Seems she should be able to save about 10 percent more of her pay, right?

You: No doubt.  We go out together and shop at the same stores. It definitely seems like we spend about the same.  I just don’t know why she can’t save more given she makes more than I do!

Good.  The same is true about you because somewhere someone is looking at you in the same way.  This person makes 10 percent less than you do—and thinks you could save 10 percent of your pay without much effort.

You: Hey!

Suddenly saving this much might seem hard if you don’t know what you’re spending that “extra” 10 percent on. If your spending is limited only by the money you have available, the money just seems to disappear.  The solution is to create a forced savings program, in which a percentage of your income, say 10 percent, is redirected into savings without your ever “seeing it.”

If you spend the money you have available (but not more), you quickly learn to spend less. You must, because the missing 10 percent isn’t sitting in your checking account.  The earlier in your career you participate in a forced savings program, the easier it is to do successfully, so don’t delay.  When you just start out, any pay is big pay.

Strategy 10:  Constant budgeting isn’t required.

While some swear by it, I am not a fan of constant budgeting because I find the task too inflexible to deal with life’s spontaneity.  Still, it is appropriate to prepare a budget when committing to a significant nondiscretionary expense.  Evaluate what you can afford based on your income level and spending history.  Don’t take the salesperson’s word that you can afford what he’s showing you.

However, if you prioritize your values and commence a forced savings program, you will consistently meet any strict budget objectives you would otherwise put together.  To me, that’s a better way to live.

Interactive by Column Five

Have you used any of these saving methods?  Which ones?  Don’t forget some of your college expenses may be tax deductible.

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Becoming parents for the first time last year has been the biggest change in our lives. As other parents will tell you, it’s a joy and a responsibility to raise a little one. One of the first decisions we made when confirming the big news was starting a baby fund for our little one and our family.

Even before our little girl arrived, we had a baby fund ready.

Why Start a Baby Fund?

Some may wonder if we had any savings before we became parents; we did. Up until that point we were comfortable with the few months of expenses being covered by our emergency fund. When we found out we were expecting, though, we felt the need to increase the safety net.

For one thing, I’m self-employed which means any time I take off for maternity leave would basically mean no income from my business. Though we expected some monthly expenses to decrease (less eating out for example), we also assumed that we would need a buffer to help us as we get adjusted to being parents.

How Much Do You Need In Your Baby Fund

The next step to creating a baby fund is to figure out how much you want to save up. Of course, your needs depend on your specific family’s circumstances. However, here are some baby related expenses to consider when calculating the amount that is right for you:

•  Doctor Visits/Delivery Costs: Our visits to the obstetrician’s office was thankfully manageable. We talked to our family and friends who had babies recently to get a ballpark figure of what to expect for delivery costs.

We also checked with Human Resources with my husband’s  company to know what would be covered and what wouldn’t be. The total costs (for the prenatal visits and delivery at the hospital) came out to about $2,500.

• Diapers: Your preferences with diapers (disposable or cloth) can have a big impact on your expenses. Cloth diapers are more upfront, but it’s pretty much a one time cost. Baby Cheapskate and other sites like it can help you snag a great deal on cloth diaper sets, further lowering your costs.

Disposable diapers can be expensive in the long run. One tip I’d offer if you decide to go disposable is to use subscription services like Amazon Mom to have your diapers sent over to you and you can save around 30%. Our diaper costs have been around $20/month (not counting wipes – which can be found at stores like Costco for a great deal).

• Food: Whether you breastfeed or formula feed, food is an expense likely to increase when you have a little one (though it doesn’t have to be by much). For many parents the money they save from not eating out as often evens out the higher food costs. If you buy formula, use sites like the ones I mentioned in the diaper section to get bulk deals. It can amount to significant savings.

• Baby Gear: We had some money set aside for any items that we’d need that we didn’t get at the baby showers. Each little one is different so don’t be in a hurry to fill out all the gaps until your little one has arrived. You may be surprised at how little you’ll need. The money saved can be used for other baby expenses or you can put it into a college fund.

• Childcare: For many families, this is the biggest expense if both parents work. Use the time before the baby arrives to compare which options are best for your family’s circumstances and goals. Daycare varies greatly throughout the country, so please get local estimates.

How to Save for the Baby

For the two of  us, automated  transfers and savings were the main strategy. Whenever we got a windfall such as a tax refund or bonus from work, having an automated deposit or transfer has helped us stay on course. We also looked at ways to cut back on expenses on our monthly budget and transferred the money into savings.

Thoughts on Building a Baby Fund

Whether or not you start a baby fund as something separate from your other savings is up to you. The thing to focus on is having a safety net to help you make the transition into parenthood. If you’re looking for more information about baby expenses, please visit Couple Money where we and other parents have been sharing their own stories, tips, and advice on what works, what doesn’t, and what’s not worth stressing over.

Saving Tips for Singles

Cut Down on Entertainment

One of the biggest expenses of single life is entertainment. You probably don’t enjoy sitting at home by yourself every night, so that means you’re far more likely to meet up with friends for dinner, grab drinks or catch a movie on the weekend, and otherwise spend a lot of time being social. Unfortunately, most of these things don’t come cheap. Dining out frequently can quickly drain your budget and hitting the bar or club on the weekends can cost an arm and a leg. So, moderation in these areas will be key to saving money.

This doesn’t mean you need to cut out all of your fun social activities. Instead, you’ll just want to take stock and determine how much you’re spending and where that money goes. Once you see how much you’re spending on food, drink, and entertainment, you can probably identify some areas of potential savings.

For example, let’s say you’re going out to dinner five nights a week and each time you’re spending 25 dollars. That’s $125 a week, or $500 a month. Just on having dinner! If this is the case, consider cutting back one or two nights a week by eating at home, or by simply grabbing a cheap bite somewhere. Even if you make this small change it could result in an extra $100 in your wallet every month.

Start an Emergency Fund

After you’ve taken a look at your budget and have identified some areas to cut back, what should you do with the money you’re saving? The first thing you should do is take a look at your emergency fund, if you have one.

If you don’t have one, now is the time to start. Having money in the bank that’s set aside for a financial emergency is the first step in building a sound financial foundation. Without this cash cushion you’re bound to resort to credit cards or loans in the event of a financial crisis, which only makes the situation worse. So, if you’re able to save a few bucks by cutting back in other areas, start by making sure you’re putting some of that money into your emergency fund.

Pay Down Debt

You’ll also want to use any savings you’ve realized to tackle high-interest debt. If you’re carrying a balance on a credit card that’s charging something in the neighborhood of 12-29% interest, one of the best things you can do with that money is to pay it down. Even if it’s only an extra 25 dollars on each monthly payment, you’ll shave years off of the repayment term and save hundreds or even thousands in interest.

Don’t Neglect Retirement

Finally, don’t neglect retirement. This one is the most difficult for young singles because retirement is the last thing on your mind. Retirement might be forty years down the road and you haven’t even thought about what you want to do next week, let alone four decades from now. But not thinking about it now is a big mistake.

Time can either be your greatest asset or your biggest enemy. The earlier you begin saving, the less you actually have to save because compound interest over time does the work for you. If you wait just ten years before starting to save for retirement you could end up having a nest egg that’s only half as big as if you had started earlier. So just because you’re single and retirement may feel like it’s half a century away, make sure you’re putting at least something into your work’s 401k or into your own IRA. You’ll thank me later.

Saving Money

Saving Money Around the House

Saving money starts at home. There are ways you can lower your monthly living expenses.

• Refinance your mortgage. For most people their mortgage payments are the biggest expense. Check to see if you can refinance your home mortgage to a lower rate. Right now, you may be able to get your home mortgage rate in the 3% range.
• Optimize your electricity. With summer weather already here in some parts of the country, running the air conditioner from now until the fall will eat up your utilities’ budget. Try to cut back on your electric bill.
• Cook (and grill) more. Summertime is perfect for cookouts. Eating with family and friends at home from your grill can be a great way to have a fun time without breaking the bank. Burgers, kabobs, and grilled chicken are easy meals to make and taste fantastic off the grill.
• Have a home garden. You can boost your meals with some fresh items from your little garden. It doesn’t have to complicated – one year we just had herbs and some peppers.
• Review your cable bundle. Check and call your current provider to see if they have any promotion specials you can take advantage of. We recently did this with our internet and cut our annual expenses by $200 while increasing the speed!
• Shop around for cell phones. If you’re looking for the best value with cell phones with some flexibility, check out prepaid providers like Boost Mobile or Go. You can get some pretty good deals on plans and get the same coverage from the major providers.

Keeping Transportation Costs Low

The next biggest expense for couples are their cars – car loans, maintenance costs, and gasoline expenses can all add to a sizable chunk. Taking a few steps can help the two of you shrink your expenses.

• Skip on the car loan. If you’re thinking about shopping for your next vehicle, consider saving before getting a car loan or lease. We manage to save cash for our last few cars and recently found a deal on our family’s Accord. While you’re shopping for your next car, look at gas mileage and weigh it against the price. You can come out ahead both with the upfront purchase price and with the long term ownership costs.
• Improve your gas mileage. You don’t have much say about the price at the gas pumps, but you can lower your fuel costs significantly by increasing your car’s gas mileage.
• Shop around for car insurance. Ever so often we get quotes on our car insurance to make sure we’re getting the best value. Even if you’re happy with your company, it pays to double check and make sure you’re getting discounts you’re entitled to. Being Costco members helped us to decrease our insurance premiums significantly.

Your Money Tips

How about you? What goals do the two of you have for this year and beyond? How are you saving money?

Olympics

Olympians seek knowledge. They want to know more about their sport, their competition and themselves, and how they can achieve their personal best. And so should you. Take the time to educate yourself about your money. Read articles and books on managing your money, investments and career success. Attend community college seminars or courses on personal finance. No matter what your level, you can learn to be a better manager of your financial life.

Olympians practice discipline. Olympic training can be repetitive and boring, but champion athletes know it is crucial. The same is true of finances, which are a necessary part of life, boring or not. Do you always feel like working out at the gym? How about doing your taxes each year? The trick is to create an automatic plan to keep you on track.  Pay your bills online on a certain day each week, regularly invest a certain amount in your savings and retirement accounts, and don’t sweat the small stuff.

Olympians aren’t afraid of hard work. How do you get to the Olympics? Train, train, train, then train some more. To apply Olympic skills to your finances, spend some time each day working on your finances. If you dedicate just 15 minutes a day to some aspect of your finances, in the course of a year you will have spent more than two full workweeks improving your financial picture. You will see real progress, and let’s face it, you can do anything for fifteen minutes!

Olympians take necessary risks. As diver Greg Louganis said, “You don’t win gold medals by playing it safe.” There is no such thing as an absolutely sure thing. If you don’t take any risks, you may never be able to achieve the gains you need to fund your short-term goals, your children’s education, or your retirement. If you have had bad investment experiences, try to overcome your fears by figuring out what went wrong and why. Research how other people have succeeded, and take your best shot. If you fail, decide what went wrong and try again.

Olympians pursue perfection. After Gymnast Nadia Comaneci scored a perfect 10 at the 1976 Summer Olympics, she told the press, “I can do better.” Olympians know they will never achieve perfection, but they enjoy the quest and aren’t discouraged by setbacks. That’s important in personal finance. Every successful investor suffers occasional setbacks and losses. The secret to investment success is to win big and lose small. Remember, there are a wide range of right decisions and only a narrow band of decisions that are decidedly wrong. You don’t need to pick the exact right investment, you just need to avoid those that don’t suit your financial needs.

Olympians stay focused. Olympic athletes stay focused on results, motivating themselves to “keep on keepin’ on” by setting clear objectives for each workout. Consistent effort pays off in finances as well. If you tend to procrastinate, grit your teeth and force yourself to face a small financial task you have been putting off, such as organizing your records, reading your employee benefits package, or preparing a budget. Just do it. Next week, do a little more. As you practice, it will become easier to do the hard stuff  so you can truly enjoy the your future without financial worries.

Olympians believe in themselves. They embrace their attributes and abilities rather than dwelling on shortcomings. As swimmer Dara Torres aged, she didn’t become discouraged. In her career she won twelve Olympic medals, many of them as the oldest member of the team, and at 45 she narrowly missed becoming a member of the 2012 US Olympic team. When it comes to money, it’s easy to fall into the trap of self-pity for what you don’t have, but it’s far more rewarding to believe in yourself and your goals. Show your self-confidence by paying yourself first and investing in your future.

Olympians embrace healthy living. They know that the healthier they are, the healthier their life will be, physically, spiritually and financially. Living a healthy financial life means not running up bills and creating lots of debt. To feel good about yourself, you don’t need to give money away that you can’t afford, or invest in risky schemes that you don’t understand. You can prudently save for your future and invest in yourself. Live within your means and give yourself the gift of peace of mind.

Olympians seek success. Instead of worrying about whether they have what it takes, they get busy! If you spend your time worrying about failure, you avoid success and become stuck in fear. Jot down the successes you have already had, no matter how small, and begin to build on them.

Olympians believe in their future. Though athletes train in the present, their focus stays on the future. If you are unable to face the future and live from day to day, you aren’t building a financial foundation for yourself.  To begin your journey toward financial independence, establish some short-term financial goals, such as contributing an additional $50 to your company retirement plan or paying for your next vacation with savings instead of credit. These small goals can inspire you to get started on your future in a big way.

Olympic athletes are amazing, that’s for sure. But they aren’t super men and women, they are people who have honed their natural abilities and strengths.  We are all amazing in our own ways. Apply these Olympic traits to your finances and you will strengthen your financial future. You’ll be glad you did.

Enjoy the Summer Games!

Travel Deals

Now that we have a little one, we’re looking forward to enjoying some family vacations of our own. How about you? Are you looking for some vacation ideas for this summer?

Road Trip or Flying Over

Depending on where you currently live, you have different options on how to get to your selected destination. While it certainly matters how much time you have for the break, I prefer taking a road trip if possible. Besides saving money on the flight, it’s also a wonderful way to learn the areas around your destinations, including some hole in the wall spots that you may otherwise miss with a flight.

Best Cities for Family Vacations

If you’re looking at taking your family on a summer vacation without breaking the bank,  here are cities that you may want to check out.

Atlanta, GA

If you want to check a metropolitan city without paying exorbitant prices, then Atlanta can be a great deal. Besides having beautiful downtown destinations like the Georgia Aquarium or the Cola Cola Factory Tour, you can also relax over at Stone Mountain Park and have a family picnic.

Savannah, GA

Lovely Savannah has some great scenery as downtown is home to some beautiful parks and the Savannah College of Art and Design. You can also enjoy riding a riverboat, hanging out at the beach, or appreciate some one of a kind art at a gallery.

Asheville, NC

What better way to escape the sweltering heat than a visit to the mountains? You can take the family on a camping trip, go horseback riding, and enjoy the great outdoors. If you’re more comfortable in a hotel, there are some bed and breakfasts around that have some of the most fantastic mountain views.

Memphis, TN

If you’re looking at incorporating some music into your family vacation, then Memphis, TN is the perfect spot. Stroll down Beale Street and see musical talents from all genres. You can also enjoy some of the best barbecue in the country as well. It’s a win-win!

Washington, D.C

History buffs and museum aficionados can appreciate what Washington D.C. has to offer up. With many destinations a short walk away from each other, you can keep the family busy and fit with a vacation to our nations’ capital.

Biggest Bang for Your Buck

If you’re looking to maximize your trip and cut back on travel costs, then using online travel sites can be perfect for you. Using the bidding feature on some travel sites can help you decrease costs by 30% or more. For us, it means planning ahead with bidding and starting low, slowly working our way up until the bid is accepted.

The downside of bidding is that you don’t know what hotel you’re going to get until the bid is accepted, however there are ways to make sure you’re getting a good hotel. We’re very specific about the type of hotel we want (at least 3 1/2 stars) and the part of the city we’re looking for. We’ve been on several vacations and have gotten some great deals using travel sites like Priceline.

Thoughts on Summer Vacations

What are your plans for your summer vacation this year? What have been some of your favorite destination spots in the past and why?