Starting Today: Step-by-Step Saving

Here's how to gather nickels and dimes and make them work for you. 

If you feel as though everyone in the world is running financial circles around you, you are not alone. Many of us have felt stuck, unable to get ahead. But there's beauty in being stuck -- in that "stuckness," we're driven to seek solutions. 

One solution? Find good ways to put money into savings. Here's a roadmap to help you start.

Step 1: Create a budget

If you don't have a budget, it's time to create one. It can be as simple as drawing two columns -- "income" and "expenditures." If you add the two columns up and find that you bring in more than you owe each month, you're golden. If you owe more than you're bringing in, it's time to refigure your monthly bills. That may mean giving up an expensive vice (smoking and alcohol are great places to start), cutting cable, downgrading your cell plan, carpooling, having your hair done at a cosmetology school, or making coffee and lunches at home. 

The idea? Put yourself on a budget that produces leftover money each month -- even if it's not much. 

This money should first go into an emergency fund. Aim for enough to cover three to six months' worth of bills. Speaking of which...

Step 2: Outsmart emergencies

I can promise: You will never regret having an emergency fund. Lose a job? That's okay; you have enough to pay your bills for a few months. Break your leg and need to go on short-term disability? No sweat; your emergency fund fills the financial gap until you're back to work. 

Building an emergency fund is like turning fat into muscle -- it takes time. If you're discouraged after a month or two because your emergency account is not fully funded, you may be tempted to stop contributing. 

I don't mean to yell, but don't stop! Even if you're slipping $25 a week into the fund, it's a great start. Once the emergency account is funded, you can move on to dreaming about what to do with all the coins you find in your sofa cushions. 

Step 3: Search the cushions -- seriously

For years, my husband and I were broke, as in "we're drowning in student loans, have two babies, and one last roll of toilet paper" broke. As crazy as it sounds, those years provide some of our sweetest memories. We were rich in ways we didn't realize at the time: We were young, healthy, and full of potential. We also felt sorry for ourselves. Friends who inherited money (we knew a few) or skipped college were so far ahead of us we could barely see their backs in the distance. They had bigger houses, nicer cars, and far more "toys" than we could afford.

When we wanted to do anything special -- like go to an amusement park or visit family -- we saved our spare change. We threw all our coins into a gallon freezer bag until it was so heavy we feared it would break if we picked it up. Once the bag was at capacity, we wrapped the coins (there was no Coinstar machine nearby) and cashed them in at our bank.

We still save spare change. No matter how much money we earn or how much we invest, it makes us happy to continue the tradition. Last year, loose change paid for a fire pit for our patio. This year, it's earmarked for new patio cushions. I am a huge believer in creating an emergency fund -- and that should be accomplished first --  but I'm equally convinced we need to reward ourselves in small ways.

Remember this: If you are able to fill a bag with coins from your car or the lining of your pocket, you're saving. At its heart, saving is just about looking for spare money, wherever you can find it.

Step 4: Wipe out short-term debt

Once you've followed the steps above and created an emergency fund, it's time to turn your attention to paying off high-interest and short-term debt. Start with the debt with the highest interest rate. Once that's paid off, move to the next debt, and so on.

This calculator makes it easy to see how quickly you can rid yourself of debt using this "avalanche" method. 

Step 5: Prepare to be the coolest old person on the block 

There are three things worth never giving up: loving people, learning, and having fun. You can love and gain knowledge without money, but having a healthy retirement account makes it a lot easier to keep having fun.

You know that money you set aside to build an emergency fund, then pay off short-term debt? After that, make it work for you in a retirement account. Let's say you have an extra $500 after funding your emergency account and paying off short-term debt. You invest the $500 monthly in a 401(k) or IRA earning 8% interest. After 10 years, you'll have approximately $88,000 in your fund. After 20 years, you'll have $276,900. In 30 years, that investment has grown to $684,730. Not bad, right? 

You've got this. If you're tempted to feel sad about your current situation, I refer you back to the aforementioned time when we were down to our last roll of toilet paper and payday was nearly a week away. We survived, and so will you. What will make you rich during this tough stage is how much you'll learn. 

The first big lesson? When it comes to saving, there is no shame in starting small.