SAVINGS ON A SHOESTRING
by Craig L. Israelsen PhD

I am a college professor. My wife is a homemaker. Needless to say, we don't have a lot of money - and we have seven children. I find it discouraging to read about how much I should be investing. And I suspect I'm not alone.

Like most Americans, we do our best to save what we can. I am convinced that we will be able to meet our goals for the future. So can most people.
How?
By investing in top-performing stock mutual funds.

BE A SQUIRREL

Many people give up on saving before they start because money is so tight. They don't invest because they don't have enough money to interest a broker or financial planner. Yet almost anyone can put aside a few hundred dollars a month for a top-notch, do-it-yourself investment program.

There are dozens of ways to save up to $200 a month...

• Child care. If both spouses work and you have children in day care, consider having the lower-earning spouse stay home to watch the kids. Much of the lower-paid spouse's income can be illusory. Taxes, transportation, a work wardrobe and day care can gobble up as much as 50 cents of each dollar earned.
• Cigarettes. A two-pack-a-day smoker can save $240 a month by kicking the habit, assuming cigarettes cost $4 a pack.
• Entertainment. For a special evening, borrow videos from the library and cook a favorite meal. A couple that forgoes going out to dinner and a movie once a week can easily save up to $200 per month.
• Fitness. Instead of spending $50 to $100 a month on a health club membership, exercise outdoors.
• Multimedia. Cancel premium cable television and eliminate cell phones and other gadgets. You can save $50 or more per month.

Learning to do without some daily luxuries is not painless. But it allows you to put away a significant amount of money for the future.

PUT SAVINGS ON AUTOPILOT

Set up an automatic investment program to deposit a set amount of your bank account into a mutual fund each month or pay period. The sooner you start saving, the better - particularly if your employer's 401 (k) matches some or all of your contribution each month. Investing small amounts of money at an early age can produce a much larger nest egg than saving large amounts, even at relatively high rates of return, later in life.

Example: You start saving immediately to send your newborn child or grand- child to college, but you can manage to put aside only $150 a month. Assuming that your investment returns average 9% a year and college costs increase an average of 5% a year, you would have enough after taxes to meet most of the cost of a public university (estimated to be about $80,000 in 2018).

If you wait until the child is eight years old to start an investment program, you would need to save $280 a month-almost twice as much-to reach the same goal.

• Focus on stocks. Over time, stocks are the only way to grow your money fast enough to outpace taxes and inflation. Diversify among large- and small-company funds and US and international funds. As you near retirement consider shifting a portion into bonds.

About the author:
Dr. Israelsen, author of the books "The Thrifty Investor: Penny-Wise Strategies for Investors on a Budget" and "Personal and Family Finance Workbook", is an associate professor of consumer and family economics at the University of Missouri, Columbia. Many of his articles can be found at www.FinancialCounsel.com

This article is posted on our web site with the friendly permission of Dr. Israelsen. Thank you!

Julian Credit Management is a firm that practices exclusively in the area of Bankruptcy and Debt Consolidation and has offices in Clearwater (Pinellas County), Port Richey (Pasco County), Tampa (Hillsborough County), Lakeland (Polk County) and Orlando (Orange County). We represent persons throughout the State of Florida.

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