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Savings Guide 2006

Start saving

  Sage advice on starting and maintaining a savings strategy.
Forget budgeting -- get a 'spending plan'
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"Obviously, this is theory and easier said than done," Dvorkin says. "Tracking every nickel is a big process and a lot of people don't do it. You can make the best budget, but if you don't track it, what good does it do? In my house, every month, we compare the actual to the budget. It's not fun. My wife hates me for it. But you have to track what you're spending."

Writing down where the money actually goes can be a major eye-opener for many families.

"A lot of people say after they do the tracking, they didn't realize the little piddly things really add up over the course of a month," says Barbara O'Neill, a certified financial planner and family and interim extension specialist in financial resource management at the Rutgers Cooperative Extension Program.

"I've even had people tell me it was the impetus to quit doing something, like smoking or playing the lottery. When they saw it was such a large amount, they realized that could be the extra $100 a month they were looking for. They had never thought of it as $100 a month, it was just a couple of bucks a day."

Rules 1, 2 and 3
Knuckey says she asks people to follow three rules -- live within their means, take care of their future and "maximize their pleasure," which could mean different things to different people.

"It might be sending your kids to college, buying a certain sports car or taking a vacation," she says. "It doesn't have to be frivolous; it just has to be in line with your values."

Families have different expenses today than in the past. Twenty years ago, most households had one phone and long-distance phone calls were for special occasions. Today, it's not uncommon for families to have two or more phone lines, plus cellular phones and pagers. They might have a cable modem or DSL, plus the cost of their Internet service. What used to be a $30 to $50 monthly expense can easily run more than $200 today.

Computers, with software and peripherals such as printers, modems and scanners, are aline items that didn't even exist on our parents' household budget sheets. The easy availability of credit and online shopping have made it easier than ever to spend beyond our means.

Along with high-tech expenses have come some Internet-based resources. Quicken, the money management software, offers a MyFinances section on its Web site to track all your financial information. Most cooperative extension programs offer family financial planning information; the Rutgers University program has a set of tools at its Web site to help families plan out their goals.

Pat Curry is a freelance writer based in Georgia.

Create a news alert for "savings" -- Posted: Oct. 1, 2006
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