Suze Orman
Step Four: Saving for the Future
Last month, you launched into a program to pay off your debts. Once your debts are paid, you can start saving for the future. It's crucial to expand your vision of who you are today to include who you want to be tomorrow. Also, if you're worried about losing your job and being unable to pay your bills while you look for a new one, saving eight months' worth of expenses in an emergency fund will give you the security you need. The best way to save is to put money away on the same day every month, as regularly as clockwork. Where do you find the money? A few places:
  1. Take the money you had previously been applying each month toward your debt and put exactly the same amount into an account earmarked for savings.
  2. Keep careful track of your expenses for one month by going through all your checks, credit card charges and ATM receipts. Make a list of categories in which you spend: rent or mortgage, utilities, transportation, healthcare, groceries, meals out, entertainment, clothes. Where can you cut back by $50 or $100 a month and save this money instead? Some ideas: Go to the movies two times a month instead of three. Get your hair cut every six weeks rather than every five. Bring your lunch to work one day a week instead of eating out all five. And cut out just two gourmet coffees a week.
  3. Work overtime if you can, or find freelance work while you save for your emergency fund; it may be worth your while.
  As you build your Financial Freedom savings account, keep this money safe and sound and liquid in a money market account or a savings account with the highest possible interest. After you have your eight months' emergency fund, if you want to save additional money in a secure place rather than investing in the stock market, look into a bank or brokerage-house CD. (For a list of the highest-yielding money market accounts and CDs nationwide, see bankrate.com.) Saving for the future is how you stay secure and pave the road to your dreams. Please start saving now.

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