How to Live Within Your Means

You’re going to need ay least $1 million to retire comfortably, but getting there isn’t nearly as tough as you think. All you have to do is save regularly and invest your money intelligently.
To accumulate $1 million, you have to save $600 a month for 30 years. That presumes your money earns 9% a year-a reasonable goal if you have a portfolio that comprises mostly stocks and some bonds. Once you retire, your $1 million will generate an annual income of $50000 and still give you enough growth to fend off inflation.
Getting Started:
So, where are you going to find that $600 a month to invest now? The key is to live beneath your means. Stop trying to keep up with the Joneses. Instead start saving for your future.
People say they cannot save will either have to work until they drop or be willing to live in a state of poverty during the last years of their lives. It is tough to save, but you have to start sometime-and the sooner, the better.
If necessary, start small-saving just $10 a week. Next time you get a pay rise, increase your weekly saving.
Have your bank, credit union or mutual-fund company automatically deduct money from your paycheck or checking account and deposit it in a savings account or mutual fund.
It’s easier to save when you never actually touch the money…and you could find that saving becomes addictive. It’s comforting to watch your money build up and realize that your finances are finally under control.
Soon you will want to save more and more. How do you do that? Take a close look at your spending-the big-ticket items and the small expenses. You’ll find that there’s plenty of room to cut down.
Day to Day Savings
Bring your lunch to work. Join a car pool, or take public transport. Use coupons-if you don’t have time for coupons clipping, ask your kids to accumulate them. Cut down on eating out .For most, all these savings can amount to nearly $4000 a year.

Beware of Sales
No one ever saves money by buying something that’s on sale. You’re still spending money-not saving it.
Slash your Insurance Costs:
You could save money on life insurance by buying it directly from a company like Ameritas Life Insurance Corp. ,USAA Life Insurance Co., Pan Africa Life Assurance and Generali. These companies sell term and cash-value insurance directly to the public, thereby minimizing commissions and fees.
You can also save money by boosting the deduction on your homeowners and auto insurance policies and increasing the waiting period before your disability insurance starts. Also, consider putting unused valuables in a safe-deposit box at your local bank, where you can insure them for far less than if you keep them at home.
Get Your Debts Under Control:
Aside from your home mortgage, keep your debts to a bare minimum. Pay off your credit cards and other personal loans-the interest on these debts is not deductible. With a $5000 balance on your credit cards, you’re paying almost $20 a week interest.
If you must borrow, consider an investment-related loan or a home-equity loan, both of which usually have tax advantages. Best of all, don’t borrow.
Save Through Work:
Your employer may offer flexible spending accounts that allow you to pay for day care and medical expenses out of pretax dollars. This is a great way to reduce your tax bill and free up money that can be saved.
Cut Down on Taxes
Consider 3 strategies to make money that would otherwise go to the taxman and add it to your savings. Buy tax-exempt municipal bonds, if you’re in one of the tax brackets. Municipal bonds will pay you less interest than taxable bonds, but you will more than make up for the difference in reduced taxes.
Use tax-favored savings vehicles like 401(k) plans, Individual Retirement Accounts (IRAs) and Keogh plans. These vehicles allow your money to grow tax-deferred, and your contributions may also be tax-deductible.
Best: Fund these accounts as early in the year as possible, so your money has more time to appreciate in value tax-deferred.
Hunt for further tax deductions. Among the most commonly overlooked tax deductions are miscellaneous ones such as safe-deposit-box rentals and investment-counseling fees…medical expenses including prescribed foods and transportation costs incurred for doctors’ visits…employment-related deductions such as the dues paid to professional associations…expenses incurred when looking for a new job in your current field of employment.
For further information on useful deductions, get one of the available tax guides.Alternatively, consider one of the tax-preparation software programs.
(Source: Jonathan D.Pound,President,Financial Planning Information Inc.Watertown.MT)
(Courtesy: Bottom Line Year Book 1995.Greenwich.CT)