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How To Build Savings Accounts with Small Lifestyle Changes

Consumers who are dealing with debt may feel that there isn’t a dime to spare. Yet, personal financial experts agree that establishing an emergency savings cushion can make the difference between a minor financial setback and a major financial disaster. Financial experts urge consumers to save enough money to cover three to six months’ living expenses. If you find the concept of saving money challenging, you aren’t alone. Personal saving as a percentage of disposable personal income has dipped into negative territory in recent years.

Start small with your savings. For most people, financial health doesn’t depend on how much they earn, but how much they spend. To find out where your money is going, start carrying a pocket-sized spiral notebook with you at all times, and write down every purchase you make, including the amount. Even if it’s only a soft drink from the convenience store, or a trip to the drive-thru at a fast food restaurant, record it in your notepad. After two weeks, review your notes and ask yourself if you really need all the things you buy.

Upon close inspection, most people are surprised to find out where their hard-earned money is going. If this is true for your case, don’t dismay—almost everybody wastes money to some degree. Understand that every purchase you make—excluding such absolute necessities as food, rent, and gas for the car—is a choice.

In addition to making small changes, resolve to boost your savings by including all of your "windfall" money. This “free money” includes increased income from a pay increase, birthday gifts, insurance settlements, escrow overages, tax refunds, and inheritances.