"The journey of a thousand miles begins with a single step." It's as true with saving money as with anything else.
These days, we've been frightened into thinking we must save thousands of dollars immediately. Most of us simply cannot do this, and the media does us no favors when it makes the situation sound so hopeless that we might as well give up.
Financial planning should be focusing on real people, people who have trouble saving, people who really need the help that instead seems geared towards the wealthy.
As a result, many of us think that if we can only save, say, $10 a month, then it isn't worth it. Not true! Once you sock away that $10 and realize that you're still okay, you'll realize you can put away a little more.
Maybe you increase it to only $20 a month, but that's $240 a year, plus the interest you'll receive for putting the money in a savings account or money market. You only need $250 to open an IRA, and that's a worthy goal.
Even if you stick with $10 a month, that's $120 a year, and if you think that isn't much money, you can probably afford to put away more.
The best part of this technique is that you get into the habit of saving. Once you do that, savings can grow and grow as your income increases, your expenditures decrease, or you receive a bit of extra money from your tax return, a work bonus, etc.
Here are a few tips for saving more by starting small:
Pay yourself first. You've heard it before, but that's because it works. When you pay your bills, write a check to yourself. Depositing as little as $5 from each paycheck into a savings or money market account should get you to that initial goal of $10 a month. If that's painless, increase it to $10 per paycheck. If, after a couple of months, you find $10 is painless, increase it a little more. Keep doing this and you might be surprised at how much you can afford to sock away!
If your employer offers direct deposit, even better. Open a savings or money market account and have at least $5 per paycheck deposited into that account. Again, keep increasing this as you get comfortable with saving the money.
Do you spend $2 a day on coffee, a muffin, or some other inexpensive treat? Do that five days a week for 50 weeks, and you've spent $500! Spend a little of that on a coffee maker and some ground or whole coffee beans, and put the rest into your savings account.
When you save money with good deals or coupons, consider putting the difference into your account.
Most importantly, get yourself into the habit of saving, and don't underestimate the effect of saving just a little. All you need to do to begin the journey is to take that first, single step.