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Saving money for retirement and building an emergency fund can seem like daunting tasks, especially if you have never done it before. You might know how important it is to save for emergencies or set money aside for retirement, but getting started can seem like an overwhelming task.

Breaking the sometimes difficult task of saving money into simple steps can make things a lot easier. Just use these three simple steps to jump-start your savings success.


Step #1 – Establish Your Savings Goals

You will not be able to meet your savings goals until you know what they are. It is important to set clear savings goals so you have something to work toward. Be careful not to make your goals too aggressive in the beginning. Something as simple as putting 1% of your pay into a retirement plan or shifting $20 from every paycheck to a savings account can be a great goal.

As you get more familiar with saving money, you can expand your goals and save even more. Saving is a learned behavior, and the sooner you get started the easier it will be.


Step #2 – Decide How Much You Need to Save

If you currently have no savings at all, your first goal should be establishing an emergency fund. You never know when a sudden financial emergency will arise, and being able to meet a sudden obligation will give you real peace of mind.

Financial experts recommend building an emergency fund equal to at least three to six months’ worth of living expenses. Start by looking through your checkbook and monthly bills to see how much you spend in the average month, then set a savings goal for three to six times that amount. You may not be able to get there overnight, but knowing how much you need to save can help you get started.


Step #3 – Handle Financial Windfalls the Right Way

Handling financial windfalls is an integral part of smart saving. Whether you are trying to decide how to spend your tax refund or figuring out what to do with a bonus at work, how you handle that money can make a big difference.

If you are eligible for a bonus from your employer, think about putting half of the windfall into your retirement plan and spending the rest. You will still get to enjoy the money, but you will also be putting some of it to work.

You can use the same strategy when you get a raise at work. If you get a 3% raise, try boosting your retirement plan contribution by 1.5%. Your paycheck will still be fatter, but so will your 401(k) account.

There is no magical formula for handling money and building your savings. Saving money is a behavior, and you need to make it a habit. Good financial habits are just as easy to learn as bad ones, and the sooner you get started the more you can save.