by Blair Mahoney

Created on: May 25, 2008

Even if you've not started a savings plan, the good news is you can start today using the money you already earn. And you can do it over time, one small deposit at a time. It doesn't require a get-rich-quick scheme or a lottery win. All it requires is a little sacrifice and discipline.

Before getting started with saving our money, let's first look at any credit card debt. This debt is the worst kind due to the high interest rates most card companies use. If a credit card that's almost maxed out has a rate of 14%, it's better to pay off this credit card quickly since it's rate is higher than the average rate of return in the stock market. And, if you just pay the minimum on the card every month, thousands of dollars will be paid in interest alone until the principle's paid off.

So, we have a case for paying off credit card debt before we invest. After accomplishing this, or even during (if you think you can spare a few extra dollars a month), we can focus on saving money on a regular basis. Now, many money experts recommend saving between 3-6 months of expenses for emergencies such as job losses, cars breaking down, illnesses, and household appliances breaking. This a great strategy to use. And since we're talking about small amounts of money, let's figure out a number we're comfortable with.

Many financial experts suggest using a small percentage, say 5% of your take-home pay to start off with. A problem with this, though, is many of us don't receive paychecks identical to the last one. Many of us have variable incomes due to bonuses, extra hours worked, or due to earning commissions. So, we could just come up with a number we're comfortable with saving every month. Let's say we just start with $25. (You can use any dollar amount you're comfortable with.)

There are some good on-line savings accounts to put this money in, and they require no minimum amounts and have no service fees. And this is pretty important since we're not talking about large sums of money. Every dollar counts here. You can just open a high-rate savings account and link it to your checking, then just transfer the $25 every time your receive a paycheck (or you can schedule automatic transfers for more convenience. Currently, several companies operating free on-line accounts are ING Direct, E Trade, or any other accounts you pull up on the Internet through a google search. A great thing about these companies is they're all FDIC insured, usually up to $100,000 in a personal account.

If you want

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