Saving money is one of the hardest things to do for most people. I find automatic savings programs are a great way to help people to reach their savings goals and make managing their cash flow less chaotic as well.. 

The first step is to look at your current cash flow numbers to see where the money is going. I often recommend that married couples divide up their expenses between essential and discretionary expenses and then rank the discretionary expenses one to three in terms of importance. If the item is a two or a three in terms of personal importance to the couple, it's up for grabs to be redirected toward additional savings.

I also think it's important to have savings goals for short-term savings and the long-term. I recommend my clients establish several online savings accounts and start automatic saving towards specific goals. For example, they may put aside money on a monthly basis for an emergency fund, vacations or holiday gifting. The beautiful thing about an automatic savings programs is that it dials down the anxiety that comes with managing your money. For example, when Christmas and Hanukkah are around the corner, having a specific holiday gifting account already set up can provide peace of mind. This type of automatic savings program also has the potential to lower credit card debt by removing the dependency on short term debt to satisfy fluctuating cash flow expenses.

The next step is to set a longer term savings goal. Our savings goal our clients is to save 15% per year. This money should be first directed towards your 401(k) or 403(b) plan (especially if there is a matching contribution). Other worthy savings options include funding an IRA or paying extra principal on a mortgage as well. Switching from a 30 year mortgage to a 15 year mortgage can also be quite desirable because you get a lower interest rate on a 15 year mortgage than a 30 year mortgage as well. 

Saving for education is also important but, this should be ON TOP of your savings goals since it will not help you to save for your own retirement.


If you have additional questions about financial planning, please feel free to call my office at (201) 843-0044. My staff would be happy to help with any setting up a free introductory phone call if you would like to talk about your financial planning needs.