Your Excuse: "I'd Love to Start Saving, but I Don't Know How" 

Why You Feel That Way
A bill goes unpaid. You meant to do your taxes or go to the bank or make an IRA deposit or whatever. You planned to do it, but life got in the way.

Look, there are a million or more reasons you can give yourself for not doing something—anything —to ensure that you'll really save some money this time around. You can tell yourself you'll be fine without the savings, that someone will come along and take care of you. You can push it off until next month or next year.

Or, you can simply own up to the fact that retirement is a very, very scary proposition if you don't have savings and resources to back you up. You can acknowledge concerns that you'll have to live in poverty during retirement, that you'll have to work part- or even full-time after the age at which you'd prefer to retire or that you're afraid you won't be able to adequately sock money away for later. These are very common fears. They take many different forms. And getting past them means doing only one thing: saving more money.

How to Get Over It
You have to learn to think of life as an equation. If you need to keep more of the money you have coming in, there are two ways to do that: (1) You can spend less of it, or (2) you can save more. They are interlocking pieces of the same puzzle. You have to do one in order to do the other. Here's what I want you to do:

Step 1: Eyes on the prize
Know what you're saving for and how much it's going to cost you.

Step 2: Know what's coming in To live within your means, you have to know what you're making. That means setting up some sort of record-keeping system. I use a personal finance software program, but you could just as easily use pencil and paper. Record what you receive from all sources, subtract the taxes you owe on all of these things, and what's left is your monthly nut.

Step 3: Know what's going out
Lay out your fixed expenses—what do you spend each month on rent or mortgage, car payment, insurance, debts, utilities and the like? Next, take a look at your variable expenses. How much did you spend the past three months on food, entertainment, clothing and so forth?

Step 4: Make changes
Once you know what's coming in and what's going out, you can make the needed changes to keep yourself living within your means.

Step 5: Automate to force your own hand
Once you figure out how much you should have left, you can start to save the money you're not spending. The best way to save—the way I do it—is by asking the bank to move some money out of checking and into savings automatically each pay period. If it helps, set up separate savings accounts for separate goals.

What else can you do quickly, cheaply and easily?

• Direct-deposit. Most employers will automatically deposit your paycheck into the bank account of your choosing. You can even split it between checking and savings!
• Open an automatic investment plan. In the same way you can invest automatically in your 401(k) through paycheck withdrawals, you can invest automatically in most mutual fund companies and brokerage firms.
• Automate your bill payment. Just as you can elect to have money funneled into savings automatically, you can elect to have bills paid automatically by your bank. This system means less check writing, less stamp buying and fewer late payments that can sabotage your credit score.

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