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personal finance

Unless you save, wealth is less likely

As we get further from the horrors of the Great Recession, it becomes easier for Americans to fall back into bad financial habits. One was not putting enough into a rainy day fund. To help people understand the importance of saving, many organizations are planning events for America Saves Week, starting Monday and running through March 1. The slogan is: “Start Small. Think Big.” Here’s how:

 Monday: Figure out where you can cut expenses to find the money to put away. Yes, this means doing a budget. So go to www.americasaves.org and search for “54 Ways to Save Money.”

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 Tuesday: Decide to develop a plan to pay off debt. List all debts, starting with the one with the lowest balance. Target that first while making the minimum payments on the others. If people can quickly pay off a debt it gives a motivating psychological boost. If you don’t think you can do it yourself, go to www.debtadvice.org to find a nonprofit credit counseling agency to help you.

 Wednesday: Time for action. Automatically deposit money from each paycheck into a savings account. Try saving 2 to 5 percent of your net pay.

 Thursday: If you have access to a workplace retirement plan such as a 401(k) but aren’t participating, start saving in it today. If you are already saving for retirement, increase the amount by one or two percentage points. If you can, max out your contributions. This is the ultimate rainy day fund.

 Friday: If you’re getting a tax refund, earmark some or all of it for savings. The IRS has made it easy to split your refund if you want to put just part of it into a savings account. Use IRS Form 8888.

 March 1: Assess your progress. You get Sunday off. But if you procrastinated, use the weekend to take action.

“Financial stability cannot exist without a healthy savings account,” said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.

On the America Saves site, take the pledge to save. You can even get text-message reminders. Share your savings stories with me on Twitter @SingletaryM. Wealth happens when you save.

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