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Expert Advice: Getting in the Habit of Saving

Getting in the Habit of Saving Interview Highlights from Your Life, Your Money

Start saving early

The most important thing about saving is to do it automatically. You can't just hope that you'll have something left to save at the end of the month. Make it one of your key expenses and do it first. Saving 10% to 15% of your income automatically takes it out of your hands and puts it aside for your long-term future.

Age 65 may seem like a million years from now, but the truth is, saving small amounts every day, every week, every month can really add up, and it's very empowering. The difference between starting at age 23 versus age 33 can be thousands or tens of thousands of dollars because money allowed to compound tax-free for many years grows exponentially. That's why it's key for people in their 20's to save, even if they think they have no money. Just a little bit really makes a long-term difference.

Beth Kobliner, author of Get a Financial Life

You need two cash reserves

On the very first day of any job, go to the benefits office and have them put some of your check into a savings account. Keep it separate from how you pay your household bills, because you're going to need a cash reserve.

Really, you need two cash reserves. One is an emergency fund of three to six months of living expenses: rent or mortgage, car payment, utilities, the cell phone you shouldn't have and all the things that add up in a month. But you also need what I call a "Life Happens Fund" for things that happen unexpectedly. If your car breaks down or you lose your job and you need a little bit of time in between. The life-happens fund is so you don't deplete your emergency fund.

Never say "It's just a dollar, it's just $1.25." If you take that out of your vocabulary, then you'll end up saving a lot of money. Instead, pick a few things that really matter to you. If it's coffee, then that's your thing. If it's shoes, fine. But you can't do everything else. It can't be the shoes and the dress and the pants and the clothes and the going out with friends and the drinks. Pick a few things that really matter. Everything else has to go.

Michelle Singletary, Washington Post financial columnist

Make saving a habit

If you can't save 10% of your income, save 5%. If you can't save 5%, save 2%. If you can't save 2%, save $20 a month or whatever. But get into the habit and make it regular, make it automatic. When things improve, you can boost that percentage, you can boost that dollar figure and it won't feel so painful to you. You've already set it up and you're already in the habit of saving.

Ron Lieber, New York Times columnist