A Little at a Time

We’d all love to have lots of disposable income – income not tied to meeting some obligation. We could save it, invest it, spend it, give it, even lend it.
But… most of us don’t have lots of disposable income. Despite that, we should still make an effort to set something aside on a regular basis. Or, maybe you have some level of disposable income and an objective or goal for some of your money.

Whatever amount you are able to save, a primary objective should be to have some funds set aside that are untouchable except in a true emergency – your emergency fund.
After that, if you are setting funds aside for a specific use, those funds should be untouchable except for the defined purpose or a true emergency.

Many of us are doing well if we put a little bit into savings each month and don’t touch it the next month. If that is the best you can do, then do that. Something is better than nothing. As Solomon advocated, “whoever gathers money little by little makes it grow.”
One easy way to get started is with an automatic monthly withdrawal to a savings account. It is a great savings tool because it makes setting money aside automatic and (almost) invisible.
For those of you that have disposable income each month you want to invest, an automatic investment plan with a mutual fund company is a good way to begin. Plus, automatic investment plans often allow a minimum investment that is less than the fund’s normal minimum investment.

Similar advice can be applied to saving for a child’s college education. If you are interested in beginning to save for your child’s college expenses, get started. Even if you are not able to set aside college money on a regular basis, even a little bit set aside every now and then is better than nothing. A 529 plan brings with it a potential state tax benefit for Georgia taxpayers. Other states may also have some tax benefits for their state taxpayers. If you have relatives or friends that would like to contribute to your child’s college funds they can open and fund a Georgia 529 account for your child. This can be a great vehicle for moving money out of an estate.

Speaking of children, teaching children about saving a little at a time is a good way to get them in the habit of saving some of their own money. Encourage your child to open a savings account with a portion of his or her birthday or Christmas money. Even if the interest rate is miniscule it can get them in the habit of saving. And, you’ll find that, in some cases, they get excited about having a savings account statement they can look at to see how much money they have. Many bank savings accounts pay a very small interest rate but you may be able to find a child’s savings account that pays a higher rate than for adult savings accounts. I found a child’s savings account at a local credit union paying 5% on the first $500 deposited. I moved my children’s money out of lower paying accounts. I also had an opportunity to teach my kids a little about interest and compounding.

Yes, setting aside even a little bit can be hard. Having the saving done automatically makes things easier. Decide what will work best for you and get started setting aside a little bit at a time!

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