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Financial Literacy - Growing your bottom line
savings
Savvy ways to save money

Money for large purchases such as homes, vacations or a new car should be drawn from an intermediate savings basket composed of CDs and other intermediate-term savings instruments that can grow for periods of six months to several years, Pomeranz says.

A good strategy is to use the CD laddering technique. It works by maintaining a pipeline of CDs that mature at different intervals.

"The idea is to make sure the money is not completely accessible to you," says Gary Foreman, publisher of Stretcher.com.

To learn more about the advantages of CD laddering, use Bankrate's CD ladder calculator.

Finally, your last basket is for long-term goals such as retirement. Whether you're investing in an IRA or a 401(k) account, you'll have access to stock and bond funds, as well as funds that contain both asset classes.

"By segregating these baskets, you don't have to worry so much if the market is going down because you know that the cycle is going to play out in X number of years. And if you manage your money appropriately during the tough times, you have a very good chance of making a decent return," says Pomeranz.

3. Get psyched and stick with it

Sometimes people get overwhelmed if they perceive that the savings goal is too large. They end up getting frustrated and give up. So it's important to keep yourself psyched.

Identify successes along the way, no matter how small. It's just as important to see the plus side of your balance sheets go up as it is to see your liabilities go down.

It'll go a long way toward maintaining a positive mental attitude and sticking with the game plan, says financial adviser Susan Zimmerman, co-founder of Mindful Asset Planning in Apple Valley, Minn., and author of "The Power in Your Money Personality: 8 Ways to Balance Your Urge to Splurge With Your Craving for Saving."

Zimmerman says savers shouldn't be afraid of opening the mail because they assume that every statement is going to be a bill.

"You need to see (your monthly statements) and watch them grow to be able to embrace what that's doing for you now and that you have some positives in your financial life," she says.

"It's an absolute psychological benefit."

Debt and poor budgeting habits are like weight gain. They sneak up on you, and before you know it, you've got a problem that won't go away overnight.

Consumers need to stay focused and realize that it may take a few years before results from modifications to financial behavior are positive.

Financial happiness means not having to live paycheck-to-paycheck, says Steve Pomeranz, CFP, host of National Public Radio's "On the Money!" He adds it's important to have patience and a balanced strategy to get to the point where you can enjoy a solid financial cushion.

"Your attitude will really will change once you get some money in the bank and you get some breathing room," he says. "Unfortunately, it's not very sexy, but the tortoise wins the race over the hare in the long term."

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Don Taylorsavings
You've matured, but maybe not those savings bonds you received as a kid.
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