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		SAVING MONEY: 10 Major Ways To Increase Your Nest Egg
		One way to accumulate assets for retirement, education or other major goals is to reduce your spending. Studies have shown that these savings can add up over the years to a substantially increased nest egg.

TABLE OF CONTENTS

  1. Prepare A Financial Plan
  2. Save Your Income
  3. Cut Your Mortgage Costs
  4. Cut Your Consumer Debt
  5. Cut Your Credit Card Costs
  6. Cut Your Bank Fees
  7. Fine Tune Your Insurance Coverage
  8. Cut Your Utility Costs
  9. Cut Your Phone Bills
 10. Forego One Big Expense Per Year
  INFOSOURCES

The familiar expression "A penny saved is a penny earned" overlooks the impact of taxes; a saved penny is, in fact, worth more, often much more, than an earned penny because you pay tax on an earned penny but not on the penny you save.

Thus, tax-free savings, with  earnings compounding over the years, can really increase your nest egg, making it worthwhile to explore the following money-saving techniques.

This Financial Guide provides you with 10 tips for making sure that more of your money is slated for saving and investment. More important, it provides you with links to other Financial Guides that help you implement these tips and maximize the ultimate return.

1. PREPARE A FINANCIAL PLAN

While most people appreciate the importance of a financial plan, too many put it off to the tomorrow that never comes. It is important to identify your goals and determine how best to achieve them. A financial plan can help you do this.

2.  SAVE YOUR INCOME

Use an automatic savings plan to make sure that you save a percentage of your paycheck every payroll period. The percentage should be determined by your financial planning needs. Some people need to save 10% of their gross pay, while others need to save more. If the amount saved goes to a 401(k) plan or other tax-deferred plan, so much the better.

But don’t stop with automatic savings. Put aside everything you can. If you invest $50 a month in a mutual fund, you could have as much as $25,000 in ten years, depending on the rate of return.

3.  CUT YOUR MORTGAGE COSTS

• Consider paying down your mortgage. For most people, paying down a mortgage is an effective way of saving and increasing net worth. Decide that you will pay $100 or $200 per month or more in mortgage principal, and do it faithfully.
• Consider refinancing your mortgage. See if you can save money by refinancing your mortgage. Go through the calculations and see whether the reduction in your monthly payments would be worth the costs involved with refinancing. The general rule is that a reduction of at least two points will make it worthwhile to refinance, if you intend to stay in the house for at least five years.

4.  CUT YOUR CONSUMER DEBT

To save interest, consider replacing your consumer debt with a no-fee, no-points home equity loan. However, bear in mind that  you are putting your home at risk.

5.  CUT YOUR CREDIT CARD COSTS

There are many ways to cut your credit card costs, e.g., switching to a  card that charges less interest.

TIP: Try to pay for everything in cash. It’s a good way of disciplining yourself.

6.  CUT YOUR BANK FEES

There are many ways to reduce your bank fees. Consider:

• Is your checking account resulting in wasted fees? Find out what you need to do to get free checking and free ATM usage and do it. Keep a minimum balance in the account, and use only ATMs at your own bank, for example. You may want to join a credit union instead of using a bank, since credit unions typically charge less for banking services.
• Don’t keep too much money in a low-interest savings account. Find out how much money you’ll need access to in an emergency, three to six months’ worth of expenses, and keep only that amount in savings. The rest of your funds should be put to work.
• When ordering checks, don’t order them through your bank. Many check printers charge less for check orders than the printers used by banks.

TIP: Stop using your ATM card if you find you are withdrawing too much cash. Make yourself go to the bank and withdraw the money instead. This may help you to spend less cash.

7.  FINE-TUNE YOUR INSURANCE COVERAGE

Here are some ways to save on insurance of all types:

• Do some shopping for a life insurance policy. It pays to check prices on life insurance policies periodically. Rates change frequently. Also, if you’ve quit smoking, you may be entitled to better rates after a few years.
• Examine your life insurance needs to see whether you are paying for too much coverage.

• Insure your home and autos with the same insurer. You may be able to get a break by doing this.
• Shop for auto insurance to try to get a lower rate.

• Install smoke detectors, burglar alarms, and sprinkler systems to save on homeowner’s insurance. Ask your insurance agent about other savings.

• Get rid of private mortgage insurance. Once you have enough equity in the home, ask your lender to cancel your private mortgage insurance.

8.  CUT YOUR UTILITY COSTS

Here are some thoughts to keep in mind in cutting utility costs:

• Your utility may have a program that subsidizes making your home more energy-efficient. Look into this possibility. Even if there is no help available from the utility, it is worth it to caulk your windows and make sure your insulation is of a high enough "R" factor.
• Consider installing fluorescent lights instead of incandescent bulbs for lights that are on all the time.
• Keep the thermostat at the lowest (in the Winter) or highest (in the Summer) temperature consistent with comfort.

9.  CUT YOUR PHONE BILLS

Today's cost-cutting competition among phone service providers offers many opportunities for savings on your phone bills, such as:

• Make sure you’re paying as little as possible for long-distance charges. Take the time to investigate which long-distance carrier will save you the most, and switch to that carrier.
• Don’t dial "Information." Look it up in the phone book.
• Have a block put on your phone for all "900" calls, if you have children at home.
• Use e-mail to correspond with relatives and friends.

10.  FOREGO ONE BIG EXPENSE PER YEAR

For instance, don’t take your yearly vacation this year. Or take a less expensive vacation. Another way to save one big yearly expense is to swap an expensive health club membership for a YMCA plan.

BACK TO TOP

• YOUR FINANCIAL PLAN: Getting Started On A Secure Future

• BUDGETING: How To Prepare A Workable Plan

• REFINANCING YOUR MORTGAGE: When And How Do It

• HOME EQUITY LOANS: How To Shop For The One That's Best For You

• CREDIT CARDS: How To Choose And Use Them Wisely

• BANK ACCOUNTS: What To Look And Ask For

• LIFE INSURANCE: How Much And What Kind To Buy

• CAR INSURANCE: 10 Cost-Cutters To Save You Money

• HOMEOWNERS'  INSURANCE: How To Get The Best Coverage And Value

• RECORDKEEPING GUIDE: How Long You Should Retain Your Records

• DOCUMENT LOCATOR SYSTEM: Handy Aid For Keeping Track Of Your Records

• E-SHOPPING TIPS: Things You Should Know Before You Go CyberShopping

• How much car can I afford?
• How long will it take to pay off my credit cards?
• How much do I need to save for college?
• How long will it take to save for a major purchase?
• Simple loan calculator.
• How much can I borrow?
• What interest rate would I need?
• How long would it take to pay off a loan?
• What would my payments be?

• Larry Burkett, The Complete Guide to Managing Your Money, (Budget Book Service, 1996), ISBN 0884861325.
• Jane Bryant Quinn, Making the Most of Your Money, (Simon & Schuster,1997), ISBN 0684811766.
• C. Frederic Wiegold, Editor, The Wall Street Journal Lifetime Guide to Money, (Hyperion, 1997), ISBN 0786861320.