Turbocharge Your Savings

Tough economic times call for sound strategies to safeguard your financial future. Experts say one way to increase how much you save is to associate with people with similar goals. Belinda Fuchs, C. P. A, president of www.ownyourmoney.com, based in Boston, offers group-coaching services for that reason - so her clients can cheer each other on.

"Most people feel very alone about the struggles they are going through with their finances, no matter what their age or income bracket. Look at the 2007 report from the American Psychological Association: 73 percent of Americans name work and money as the greatest factors that affect their stress level," she explains.

Studies prove Americans need all the help they can get to improve their savings rates.

The Employee Benefit Research Institute (EBRI) cites a 2004 government study that pegged the savings rate in the U.S. at only 1.4 percent. among the lowest in the developed world. More recent studies say the rate of savings is - 1 to 0 percent. To be fair, some studies don't include money saved in employer retirement accounts. And since the statistics are average savings rates, some people save significantly more.

The overall picture is sobering: In an EBRI annual Retirement Confidence Survey, 55 percent of workers said they believe they are behind schedule with planning and saving for retirement. And while almost 70 percent have begun, many have saved less than $25,000. In addition, 68 percent of today's workers are skeptical that Social Security will be able to provide them benefits of at least equal to those of current retirees.

PAY YOURSELF FIRST

A mistake many people make is trying to save money out of whatever is left over after the bills are paid. Unfortunately, people usually spend all the money each month. So experts say the most significant decision you can make to achieve a higher savings rate is to "pay yourself first."

Jonni McCoy, author of Miserly Moms: Living on One Income in a Two Income Economy, advocates the concept and explains how it works.

"I recommend that people have an automatic withdrawal made from their paycheck each pay period so that they don't see the money. This forces people to live within the rest that is deposited into the checking account. And most of us are perfectly able to live within what is left. We are just not used to it," McCoy says.

Fuchs agrees and has a minimum target you should aim to save.

"People need to start by figuring out where their money is ibeing spent. Most people think they know, but when we detail out where they think it is going and where it is actually going, there is invariably quite a disconnect. Once they see this in black and white, then they need to take at least 10 percent off the top...."

Phyllis Vance, a high-school health and physical education teacher, for example, uses payroll deduction to pursue her aggressive savings goal of retiring at age 55.

"I had great role models for saving money because of my parents," Vance says. "They didn't buy anything they didn't have the money for: neither do I. I've eaten a lot of peanut butter sandwiches, too."

Vance loves to travel, funding her trips by working at extra events for the school.

"Along with saving money, I have also been able to travel to 48 states and five other countries as well as ride my bike across the United States," she says. "You can have fun along the way to reaching your goal."

NEVER TOO LATE

Another important aspect of saving large sums of money is believing that you can.

"It is never too late to improve your financial situation," money management coach Fuchs says. "Well into midlife, Ray Kroc created the franchise that would later become the McDonald's Corporation. If you start now to improve your money management practices and remain open to the opportunities, you may still achieve the results you want.

"Ray Kroc said about the year he purchased the McDonald's franchise: 'I was 52 years old. I had diabetes and incipient arthritis. I had lost my gallbladder and most of my thyroid gland, but I was convinced that the best was ahead of me.'" Obviously it was.

"There are a lot of people who come to me in their 50s, haven't saved much, and are worried that they'll never be able to retire comfortably. They have an important choice to make: Either they can continue to feel bad about the choices they made in the past or they can choose to do something different and move forward. Too often their past mistakes hold them back; they've lost hope or are afraid to get help," Fuchs adds. Fortunately, if someone takes the first step toward saving, they often find many more ways to improve their situation.

Savings Savvy Tips

• Sweat the Small Stuff: Do the math to see the cumulative cost of small indulgences and then motivate yourself to cut back.
• Deal With the Big Stuff: Comparison-shop for the best mortgage, credit card, and insurance rates, etc.
• Beware of Analysis Paralysis: While researching investment options, start socking money away in a bank or money market account.
• Ignore the Joneses: Only buy what you need and want, not what will impress others.
• Ramp Up Your Knowledge: Join a class, buy a book, and/or get expert advice. For online financial assistance, visit these helpful websites: www.choosetosave.org, www.ownyourmoney.com.
• Tame Taxes: Corporate employees may invest in 401 (k)s, if your employer offers them, and utilize Flexible Spending Accounts. The self-employed may be able to maximize deductions and/or shift income.
• Seek Expert Advice: Carefully select advisors for areas you need.
• Visualize: Hold a mental picture of the financial life you seek. Cut out pictures of enjoying retirement. It may seem corny, but evidence shows it helps.
• Control Debt: Eliminate as much debt as you can.
• Save Anyway: Even if you have debt, get into the habit of putting some money aside regularly for emergencies.
• Separate Your Savings: Put longterm savings in a separate account from regular savings so it's hard to get at, then forget about it.
• Believe You Can Do It: Follow these sensible savings steps, and you will believe you can do it - because you are!