Save in Small Bites

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It can be a little daunting to think about all of your major savings goals at one time. There's the massive retirement fund that you want to build and never seems to get big enough. There's the emergency account that should be filled with at least enough money to cover three to six months' worth of expenses. There might even be one or more college funds, assuming college doesn't cost an actual arm and a leg by the time the little tykes grow up. Add it all up, and we're talking about hundreds of thousands of dollars. Yikes!

Obviously, you can't save all of that money tomorrow, so let's start small. Think in more humble terms, especially if you're not saving at all or you can't figure out why you're not saving more. Ask yourself how you could put aside just an extra $100 per month.

That's an extra $1,200 in a year, and if you had put an extra $1,200 into your kindergartner's college fund this year, it would be worth $2,263 by the time he or she heads to college. That assumes a pretty conservative 5% growth rate.

Let's say you saved that money for retirement and invested your $1,200 in a fund that tracked the performance of the Standard & Poor's 500 Index, which represents about 70% of all U.S. publicly traded companies. The long-term average growth of the market has averaged about 10%. If the market kept up that performance, the $1,200 that a 35-year-old saves today would be grow to $20,939 by the time that person retired at age 65.

So, there's plenty of incentive to figure out how to save that extra $100 every month. To get you started, here's a list of savings ideas that don't require any major lifestyle changes. You may have to do a little research, but you won't have to sacrifice your morning jolt of caffeine. Combine a few of these points, and you might hit $100 in savings without doing much at all.

• Contribute an extra 1% of your salary to your 401(k) or other workplace retirement plan. Because the money is withdrawn before taxes, you'll lose less than 1% from your take-home pay. You'll probably never even notice the money's gone, but your retirement fund will start to fatten up more quickly.
• Review your telephone, mobile phone, Internet, and cable service. If your mailbox is anything like mine, it's full of special offers and bundled packages. See whether you can get a better deal than the one you have now. If you see a better rate advertised, try calling your current providers and asking them whether they'll meet the competitor's rate. While you're reviewing all of this, cancel any flashy services or premium channels that you don't use.
• Call your credit card companies and ask them to lower your interest rate. This could mean serious savings for anyone struggling to pay off a balance. (Your extra $100 should go straight to the credit card instead of into savings, by the way.) If your credit company is hesitant to lower your rate, arm yourself with offers from competitors. You've probably gotten a bunch recently. If they won't budge, look for balance-transfer options with lower rates. But before making any move, examine transfer fees and look at the interest rate that will be in place after any teaser rate expires.
• Re-examine your car insurance. Your policy probably renews automatically. If you haven't looked at it since you first signed up, see whether you still need all the coverage you have. Consider raising the deductible. You can take that extra money and stash it in an emergency fund so that paying the deductible won't be a problem.
• Stop heating the whole neighborhood. A little weather stripping and a programmable thermostat can go a long way toward cutting the utility bills -- and saving the planet. They're cheap and easy to install. Turn down the heat on your water heater if you have it set to "scald." Fix anything that's leaking. By the same token, shut down your computer at night and turn off the lights when you leave the room. (Yes, I know I sound like your nagging mother, but there's a reason she nagged you about this stuff.)
• Cancel any membership or subscription you aren't using.
• Eat out of your pantry for a while. If you dig back there, you will find long-lost bags of pasta, cans of soup or beans, or piles of rice. I have enough dry goods in my kitchen to feed the entire neighborhood for about a year. There's probably enough in your pantry to cut your grocery bill down significantly for a while. And, if you've been buying bottled water, switch to a filtered pitcher.

Hopefully, that will get you started thinking creatively about ways to fill your savings accounts without making radical changes. Then make sure to put that $100 in spare change toward your big savings goals.

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