The benefits that come with a healthy personal savings plan are not flashy. In our culture, the idea of saving has largely been downplayed and ignored when compared to other developed countries. Comparatively, then, the savings rate of Americans has ranked below those other countries.

However, in a challenging economic environment, savings become more important than ever. Some benefits that savings bring are huge: 

- Financial security 
- The ability to handle financial emergencies without going into debt 
- Peace of mind

Start with Small, Manageable Steps

You want your savings plan to succeed. If you try to do more at first than is realistic, you set yourself up for frustration and failure. Look at your finances – your income and expenses. What can you realistically set aside per paycheck? If you want to set aside more, can expenses be cut?

Decide upon an amount you can stick with in the long term. You can always increase the amount when more is available.

Direct Your Savings with Purpose, Goals, and Built-In Accountability

First, ask yourself why you are saving.  You are more likely to save with success if your saving has a purpose. Is the exact purpose: 

- To fund a three- to six-month emergency cushion to cover living expenses? 
- To save for your child’s college education? 
- To save for retirement? 
- To save for a vacation next year?

Next, set a goal. Make your goal SMART – an acronym for a way to think about goal setting: 

- Specific 
- Measurable 
- Attainable 
- Relevant 
- Time-bound

For example, a SMART goal might be, “I am going to save $300 in the next three months to put into my emergency fund.” Smart goals are more likely to succeed than vaguely worded goals. Check out www.Dummies.com for information on SMART goal setting.

Build accountability into your goal setting by: 

- Establishing benchmarks during your goal process.  For example, ensure that you are able to succeed in saving $100 at the end of the first month, if your goal is to save $300 over three months. 
- Using a goal buddy.  That is, report your progress to a supportive person who you trust, and define your roles and expectations ahead of time.

Establish a Regular, Sustainable Habit of Savings

Regularity is more important than quantity. If a good habit of savings is formed, you are likely to succeed over time and reach or exceed your goals. Habit-forming actions take time and regularity – some experts say that a habit forms only after repetition for 21 days.

Put Unexpected Windfalls to Work for You

Windfalls can be used to your advantage to grow your savings. When extra money comes along that is above and beyond the income you typically depend upon, tuck it into savings before you miss it. This money can come in many forms: 

- Pay raises 
- Tax rebates or refunds 
- Inheritances or unexpected gifts 
- Cash back on credit card purchases (though you only come out ahead here if you pay your entire balance on the card every month, and do not accrue interest) 
- Interest earned in savings accounts 
- Coins and change collected over time 
- Money you raise from garage sales or online sales of excess junk. Many people raise money selling personal items on www.Ebay.com.

Once you learn how and where to look, “hidden” money can be found in any number of places.

Use Automatic Deductions from your Paycheck

Automatically contributing to savings directly from your paycheck is a great way to regularly and quickly build savings. You will not be as likely to miss the amount, nor will you be as tempted to spend it, if it is already deducted from your pay.

Make Your Bank Work for You

Online banks – which lack the overhead of a brick and mortar bank – often pay comparatively higher interest rates. Check out these two online banks: www.ingdirect.com and www.hsbcdirect.com.

When shopping for banks, pay careful attention to fees (such as ATM fees, overdraft fees, statement fees and minimum balance penalties) that can cut into your savings over time.

Additional Resources 

- www.frugalvillage.com is a large online forum exploring all aspects of frugal living and successful and creative saving.  
- The Tightwad Gazette explores many ways to save money in all aspects of life.  
- www.careOnecredit.com that lists many ways to save, around the home, on the road, grocery shopping, eating out, and socializing.