Creating a Savings Plan for Retirement

So, you have a rough idea of how much you need to save each month to reach your retirement goal. The next step is to budget your money carefully so you can set aside the money now that can help you realize your dreams later.

Income. First you'll need to determine your total monthly income, including wages, tips, alimony, investment income, and the like.

Expenses. Then you need to take into account your average monthly expenses, including mortgage or rent, car payments, average food bills, medical expenses, entertainment and the like. You'll also need to set aside an additional amount for those expenses that don't come along every month, such as car insurance or taxes. In order to make retirement planning a priority, include as an expense the amount you need to save each month for your retirement nest egg.

If you find you have more expenses than income -- not an uncommon condition these days -- you will probably want to consider cutting expenses, increasing your income by taking another job, or maybe even both options.

Of course, another pitfall that affects many of us these days is debt and credit card problems. If you feel that your monthly payments and the long-term interest charges you're incurring are overwhelming, you may want to consider working with a credit counseling service to help you set up a plan to work with your creditors and reduce your debts.

But, no matter what your situation, keeping the discipline to save isn't always easy. Experts say that it can be less of a challenge if you follow these tips:

• Pay yourself first. Put away first the money you want to set aside for your future goals. You may want to have a set amount automatically deducted from your checking account or join a retirement plan at work that deducts money from your paycheck.

• Put bonuses and raises toward savings.

• Make saving a habit.

• Take a close look at your savings plan every few months to make certain you stay on track.

Now that you know how to start the savings habit, the next step is to consider what investments or plans can help you reach your long-term goals.

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