For the 2nd installment of Smart Money Moves, I thought I would continue with last week’s theme:  saving is hard.  Really hard.  Really really… (get the picture?)

One of the smartest ways to save–actually, the smartest way to save–is through what experts call forced savings.  This is exactly what it sounds like:  forced.  Compulsory.  Have-To.  Think payroll deductions, automatic drafts from your checking account, or even top-up cards like Bank of America’s Keep the Change debit card or Truliant Federal Credit Union’s Rainy Day Savings Account.

The automatic, difficult-to-undo nature of these programs is exactly why they are so smart.  They keep us from screwing up our own plans.  As humans, we are prone to sabotage even our best-laid plans by making bad decisions in the heat of the moment–or rather, at the point of purchase.   We really want to save for medium- to long-term goals, but we can easily forget that when faced with a smokin’ deal at the mall or another fun offer to hit the town with friends.

Forced savings takes the money away before we have the chance to blow it and puts it to work towards our goals rather than our whims.  Forced savings means discipline–which is the only real way to save consistently and achieve your goals.

So take a deep breath and put your savings on autopilot with these easy steps:

1) Set up payroll deduction for your retirement plan at work if you can–and if your company offers a matching program, at least contribute enough to qualify for it (it’s free money!).
2) Set up automatic transfers from your checking to savings account to fund your Emergency Fund and other short-term goals
3) Do the same for longer-term goals, just have the transfers go to your investment or mutual fund company.
4) Sign up for a top-up debit card if your bank or credit union offers one–they are an easy way to save additional $$.  Of course, make sure there are no hidden fees on the card–that would defeat the purpose!

Now, I’m telling you to take these steps because I assume you’ve already created a financial plan, so you know what your goals are and how much you need to be saving for them.  (Wait, you haven’t?  Come on now…you knew I was going to say this).  If you haven’t created a plan yet, pop over to SimpliFi to get started, or make an appointment with an independent financial adviser if you feel more comfortable going that route.

Once you get a plan and your forced savings process up and running, you’ll be surprised at how quickly you will adjust to your reduced monthly cash flow.  So get a plan and start making forced savings work for you!

Popularity: unranked [?]

If you’re like most people, finding additional money for savings is hard.  Really hard.  Really, really hard.  But that doesn’t mean you don’t want to do it–you just want to find ways that aren’t very painful, right?

To give you some ideas, from time to time I will be offering up “Smart Money Moves” that most of you can use to find additional savings dollars without the dreaded “cutting back.”  They won’t be completely painless, but they will be easier to handle than say, selling your organs or giving up cable TV (which isn’t such a bad idea, depending on your TV viewing habits…but that’s for another day).

Today’s Smart Money Move is increasing the deductibles on your home and auto insurance.  The good news is it’s fairly painless and can free up dollars right away.  The bad news is you will actually have to look at your auto and home policies, which are not the most exciting reads in the world, and you might even have to talk to an insurance agent (yikes!).

But it’s worth it, especially if your deductibles are currently at $500 or less.  By increasing these amounts to $1000 (or more, depending on your liquid savings), you will probably save a few hundred dollars annually.  And if you have an older car, dropping collision and comprehensive coverage can add another hundo or two to your total savings.  Here’s a great article that covers the specifics of how to figure out if you need these coverages.

So get to work.  Pull out your (probably dusty) home and auto insurance files and check your deductibles.  If they are low, then it’s your lucky day–you can make a smart money move right now.  If you have an older car and you’re carrying collision and comprehensive coverage, even better.  Call or email your insurance company and cancel these coverage right now.  Stop overspending on insurance and instead, direct it towards a goal or goals you care about.  Good luck!

Love, Sophie

Popularity: unranked [?]