7 small steps to big savings

Next, track your growing assets in Excel or on a legal pad each month to stay focused on how much you own and how much you owe. Before you know it, your focus will switch from lack to abundance.

In a dire emergency, such as when you lose a job, you can always sell mutual fund shares or stocks to cover costs. "Is that ideal?" D'Angelo asks. "No, but keeping the money tied up with strings like that will discourage you from dipping in except for when it's truly needed."

This prevents you from liquidating the brokerage account when the next shiny object or unplanned expense comes along.

5. Save for something specific 
Having a positive goal to work toward can be a powerful motivator for saving. D'Angelo gives the example of a young couple she worked with. They planned to marry and were committed to buying a house. Instead of telling them to give up eating out and going to Starbucks, D'Angelo showed them how they could save for a modest down payment. "When you can see that there's a possibility to get a house down payment -- that's a powerful encouragement, so they were willing to go through Draconian changes to get there."

The couple was motivated by their desire for a house. Once you see how you can afford to fund your dreams, it sweetens the medicine, so you'll want to save rather than feeling deprived. It's the inspirational equivalent of saving for vacation instead of a root canal.

"Once they've bought a house, then Banana Republic and J. Crew won't cut it anymore. They can achieve dreams, not just goals," D'Angelo says.  

6. Raise the ante 
Looking for extra money in your budget can seem like a fruitless game of hide and seek. But the money may be hiding in plain sight, says D'Angelo. "People make more than they see, but never focus on it," she says.

One trick for finding money is to make a list. On the left, log what you are currently spending; on the right, put down what you want to buy. When you do this on a line-item basis, it's easier to see where you can make adjustments. It's important to tackle each change piece by piece, rather than trying to do it all at once.

D'Angelo prescribes building $1,000 first in a brokerage account to get the knack of saving, then work on building and keeping cash reserves by saving $1,000 in passbook savings, then $1,000 in checking. Every time the passbook gets to $1,000 she has clients move the money to a tax-free money market mutual fund. D'Angelo says the idea is to start several little accounts and feed them until they become a big account in aggregate.

Once you get on track, raise the ante. Pretty soon, you'll have funded one month's worth of living expenses, next two, then three.

7. Take it one step at a time 
The only practical way to make this mind-set stick is by integrating the steps into your life one at a time. Unless you're doing it in baby steps, you're not retraining the brain, says D'Angelo. Trying to leapfrog forward to the end of a lesson is like doing homework without reading the textbook or going to class. It's the same with managing money. You don't have to do everything all at once, but you do have to start someplace.

When you see your investment portfolio increase in value faster than a cash investment, you'll have a "hosanna moment," as D'Angelo calls it, and get into the saving mind-set.


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