Copyright © 2008 Thomas Husnik

A consistent approach to personal savings is fundamental to a healthy personal finance plan. You will find that by including savings in your budget that you reduce your chances of getting into overwhelming debt that so many find themselves in today. These people in the overwhelming debt are those who never learned to save for what they want instead of using credit only as a tool to purchase high-priced items that would be out of a person's reach otherwise (such as a home or car). But whether you are in debt or just starting out and have no debt, you should start a savings plan.

For those already caught in the grips of debt and using their credit cards to handle those unplanned expenses, you need to cease that kind of spending now. By opening a savings account and depositing just a little each time you are paid you will see it add up over time and it will be a great reserve for when you do have those unplanned expenses. Can you put aside $10 every time you get paid? Can you set aside more? The amount is not as important as getting you into the habit of saving and making it part of your personal financial plan.

Saving will be hard to get used to at first if you are in the habit of using credit cards. Bad habits are very hard to break. One thing you can try and it can be a great motivator is to take what money is freed up after paying down credit cards and putting it into savings. For example, let's say your minimum payments on credit cards each month totals to $200. So you decide it's time to get out of debt and you start paying extra on the credit cards and then the next thing you know, the monthly payments total to $150.00. You can set aside the $50 in your savings account and in some ways you never miss it because you were accustomed to paying $200 each month. And the money builds in a cash asset account that you can get access to if you have an emergency instead of using the credit card.

401K and 403B savings plans offered by your employer are also good ways to save. The advantage here is that your employer will typically match up to a certain percentage of what you contribute so it's in a way like free money. Contribution to the plan is typically handled by payroll deduction so in a sense what you never see, you never miss. These plans also, for the most part, yield much higher rates of return because your funds are invested in the stock market or mutual funds. But this type of savings is normally not used for short term emergency expenses as withdrawal comes with penalties and tax implications. These plans are used mostly for retirement savings.

Avoid making deposits into your savings account that are so large that you have to later go back and withdraw a portion of it to cover living expenses. Just start small and build it over time and soon you can get yourself off of credit card dependency and build a valuable asset.

My name is Tom Husnik. I live in Minnesota. My web site is at: http://www.husnikfinancialonline.com