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A savings plan for all seasons

By Kemberley Washington · Bankrate.com
Thursday, January 17, 2013
Posted: 5 pm ET

If you have had trouble saving in the past, the new year can be a chance to start again. Implementing a savings plan is crucial to help you through good times and bad.

During seasons when you have more than enough, it is essential to put something aside for rainy days. This may sound like a simple concept, but it is most often ignored in a society where we want more and more.

A business owner once told me the key to his financial success was simply to live below his means and save during seasons of prosperity. As your income increases, it is important to make certain your expenses do not.

The business owner said he would often save windfalls, profits from new clients and any other financial increases. Because of this, he has had the ability to purchase cars and other assets with cash and live a debt-free lifestyle.

Save without effort

One of the keys to successful saving is to save with little to no effort. After graduating from college, saving money was a huge challenge for me, mostly because I lacked discipline. To conquer this challenge, I began to save in accounts where withdrawing my money would be challenging due to penalties or lack of access.

Your company's 401(k) plan is a great place to start using this savings technique. Payments are automatically deducted without any effort on your part, and you generally cannot access the funds without paying a penalty.

I also like saving into short-term assets, such as savings bonds. Savings bonds prohibit withdrawals until after a year. That means you are required to leave your money intact for a period of time.

Of course, the downfall is if you really need the money, you may not be able to withdraw it. But if you lack discipline like I did, this strategy is a key way to jump-start your savings plan. I still use these saving techniques in my financial life and they have served me well.

Remember: your choice, your future!

Kemberley Washington is a certified public accountant and business professor. She writes a personal finance blog at Kemberley.com. Follow her on Twitter and on Facebook.

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