Start with these four savings fundamentals and complete them in order.


Contribute to your company’s retirement plan up to the maximum employer match. Even if money is tight and you have multiple priorities, make it your first goal to contribute at least enough money to get all the matching funds your company offers.


Pay off nondeductible, high-interest rate debt, like credit cards. If you no longer have to pay 13 percent interest or whatever high rate you owe on debt, you can keep that money for other things.



Create an emergency fund to cover at least three months of essential living expenses. This will help you keep from dipping into long-term investments or borrowing at unattractive rates when you need cash in a hurry. And remember, you may want to save even more in your emergency fund if your job is in jeopardy or if you’re feeling insecure about your financial future.


Contribute the maximum allowed to tax-advantaged retirement accounts. For example, if you’re saving only enough to capture the match in your company’s retirement plan, increase it to the maximum allowed. Or fund an IRA. The more you set aside, the more secure your retirement may be.

Once you have a handle on the first 4 fundamentals, move on to the last 4 and complete them according to your personal financial priorities.


Save for a child’s education. To handle rising college costs, make the most of tax-advantaged college savings plans.



Save for the down payment on a home. If you’ve mastered Savings Fundamentals 1 through 4 and your personal circumstances are right for buying a home, start saving for a down payment.


Pay down tax-deductible, high-interest-rate debt such as a mortgage. Reducing high-interest-rate debt—even if it’s a tax-deductible mortgage, home equity line of credit or student loan—can enhance your ability to save.


Keep investing. To stay ahead of inflation, your money needs to earn more than many traditional savings accounts pay. The first step to long-term investing success is to get going right away.

Source: This information is for educational purposes only. It is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.

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