Maximize your
401(k). Your 401(k)
at work is likely to be the best investment around.
In addition to using pretax dollars (unless you've
got a Roth 401(k)), your employer probably
matches a portion of your contribution. "Even
if it's only a match that's 25 cents on the dollar,
that's a guaranteed rate of return of 25 percent the
first year," says Crossan. "At the bare
minimum, people should invest up to the full match
amount."
Use tax-advantaged accounts to help reach
your goals. If you've maxed out your 401(k)
at work, consider contributing to an IRA. Whether
you choose a traditional or Roth IRA will determine
whether you reap the tax benefits now or in the future.
To save for educational goals, consider 529 plans,
which will allow your savings to grow tax free.
Take advantage
of flexible spending accounts. Health care
has gotten increasingly expensive, but a flexible
spending account, or FSA, is a tax-smart way to pay
for such expenses. Families can pay for up to $5,000
in care -- tax free -- if they put it into a FSA.
And that means more money to pay for the things you
really want.
5. Don't go it alone.
Get a savings buddy. Whether it's
a friend, a relative or a co-worker, find someone
who will help you stay accountable and make sure you're
spending your money wisely. "Once you've set
a goal, they can help you stick with it and remind
you to save consistently," says Andrée.
Make sure you
and your partner on the same financial page.
If you're frugal and your partner's a spendthrift,
be willing to negotiate to make sure you both get
what you want. "Look for ways to protect your
own interests," says relationship expert and
author April
Masini. "Consider asking to have your needs
met: 'I would really feel safe if I knew we put away
10 percent of our weekly income for a rainy day' is
more of a problem-solving statement than 'Your spending
is making me crazy,'" she says.
Pass it on. Good savings habits
don't just benefit you -- they can benefit your children
as well. By modeling good behavior, talking to your
children about money, and teaching them that how to
spend, save and donate their money wisely, you'll
help the next generation prepare for their financial
future. "Teaching your kids about money is easy
to do, it makes so much sense, and it will benefit
them in he long run," says Andrée.
