Getting into the saving habit

Nine easy ideas for parents

Log your spending habits for one month
There's no miracle to saving money. It's as simple (and as difficult) as figuring out how to spend less than you earn. But before you can cut your spending, you need to know what it is you're spending your money on. So, for the next month, keep a log of all your daily, weekly, and monthly expenditures (use a little pocket journal to jot down notes as you go, just as if you were on a business trip keeping track of your expenses).

Prepare yourself for some sticker shock. That harmless morning latte on the way to work can add up to a tidy $60 a month, or $720 a year, or $7,200 in ten years -- a nice chunk of savings. And those impulse baby clothes purchases you put on your credit card really cost 20 percent more than it says on the price tag (because of interest charges) unless you pay the bill in full each month. No one is suggesting you go without caffeine or your baby go without adorable outfits -- just be smart about it. If you can't afford Starbucks, keep a stash of ground espresso at work, and make your own pseudo-lattes (microwave ovens do a respectable job of steaming milk). Or if your budget is tight, wait for those baby clothes sales to go on sale when you shop, and give yourself a cash limit.

Pay yourself first
It may seem counterintuitive, but the secret to getting into the savings habit is to put yourself first. That doesn't mean buying every CD or kitchen gadget that catches your eye -- it means including yourself among the regular creditors you pay every month.

Set some realistic long-term goals and then "pay" yourself by putting money aside in a savings or investment account on a regular basis. If you wait until the end of the month to see what's left over after paying for essentials and shelling out a few extra dollars here and there for impulse purchases, you'll probably find, like most people, that there isn't much left.

Don't give yourself a choice. Set up your retirement, emergency savings account, and college fund with automatic monthly transfers -- no matter how small-- from your paycheck or bank account. Like nightly tooth flossing, regular saving is a healthy habit that accrues over time and becomes a routine you can't live without. And at the end of each month you'll have the immediate gratification of knowing you socked something away in the bank.

Stagger your savings due dates
Most IRAs, college accounts, and other savings options allow you to pick your own date for automatic withdrawals from your checking account or paycheck. Stagger these dates to make sure all the money isn't transferred out of your account on the same day. If you're paid biweekly, tie one withdrawal to each payday. If you're self-employed and money comes in throughout the month, pick a couple of dates in the middle of the month at a time when you're not paying other bills.

Pay down debt
You've heard it before, but it still may seem hard to believe: Paying off your debt is one of the best ways to save money. This is because the interest you pay on most loans (particularly credit cards) is much higher than the interest you get with most savings options. So get rid of as much credit card, student loan, auto loan, and other personal debt as you can (a home mortgage loan should be your one big debt), and then start saving. For more on paying off and consolidating debt, see our guide.

Be your own loan officer
When you finish paying off a car loan or other type of loan, keep making the monthly payments -- to yourself. Put them into a savings account or, better yet, set up an automatic withdrawal for the same amount into a higher yield investment account.

Motivate yourself with a big-ticket goal
Pinpoint what you really want (a new sofa, a DVD player, a vacation) and what it will cost, and set a realistic goal, such as giving yourself six months to save for it. Cut out pictures of your goal and put them on your bulletin board at work, your refrigerator at home, and in your wallet. Every time you think about buying new shoes or towels, ask yourself if you want or need them as much as what you're saving for.

Open a savings account you can't touch
Save for even bigger purchases, such as the down payment on a house or car, by putting chunks of saved-up money into certificates of deposit (CDs). These accounts offer virtually no risk, they earn higher dividends than plain old savings accounts, and the money must stay in the account for a predetermined period of time -- so you can't get at it whenever temptation strikes.

Start a loose change jar
Put a jar -- preferably a large one with a narrow mouth, so you can't get your hand into it -- in a prominent place, and empty your pocket or wallet change into it at the end of the day. If you can't stand the thought of coin rolls, use the change-counting machines available at some supermarkets when the jar is full. At the end of the year, this found cash can add up to enough money to pay for a weekend getaway, a Christmas gift, or a health club membership.

Sock away surprises
Any time you get an unexpected windfall -- a tax rebate, holiday bonus, or cash gift -- put it into your savings account. You weren't counting on this money as part of your regular income, so don't spend it as such. Think of this as your Europe or new car account. Or, if you haven't gotten out of debt yet, use it to pay down credit cards and loans or make an extra mortgage payment toward the principal (which reduces the interest you pay over the life of the loan).