How I did it: I started by opening a free money market with no minimum amount that would give me a higher interest rate than a regular savings account. (I recommend virtualbank.com.)  I made sure to put a little money in that account as often as I could.  Even $20/mo. was better than nothing, because it got me in of the habit of saving, and that's the most important part.  As I saved, I started having enough money to cover emergencies, such as car repairs, or even just big expenses that I don't have often, like eye exams and contact lenses.

The next step was just as important.  Once I had the less common expenses covered by my savings, I could focus my checking account toward daily and monthly expenses, like gas and bills.  But that didn't mean I only saved money in my money market.  I had the good fortune last year of having a modest tax return.  That gave me an opportunity to get ahead.  I used part of the money for savings and part for other expenses, but I left some of it in my checking account.  Now, I have enough to cover all of my biweekly expenses, but I don't have to fear overdraft fees, and I try not to let my checking fall below $400.

I also recommond making a good budget for yourself.  I use mint.com - it's a really in-depth tool where you can create a monthly budget, track your spending, and even manage all of your accounts (checking, savings, credit cards, even your stocks) all in one place.  The best part?  It's secure, and it's absolutely FREE.

Lessons & tips:

1. Open a high-yield savings account.  Look for a money market (or similar) where you can access your account online.  This makes transfering (and SAVING) easier.  P
2. Save whatever you can afford, as often as you can.  Even the smallest amount counts, because you're forming a new habit.
3. Track your spending and create a budget.  (Try using mint.com)
4. Talk to other people about it.  Share your victories with friends or family, and make it something you're known for.  It creates an atmosphere of support around you that is invaluable.

Resources:

• Virtualbank.com
• mint.com

Jan 10, 2009, 05:09PM PST | 1 comment | 3 cheers