The Unvarnished Truth About Savings

NEW YORK (MarketWatch) -- There are two kinds of nonsavers, according to certified financial planner and investment adviser Bill DeShurko: people who don't earn enough money to put anything away and people who think they don't.

If you're making a reasonable salary and still find yourself living paycheck to paycheck, the problem almost certainly isn't your income -- it's your attitude. So says DeShurko, author of a book scheduled to be published next month, "The Naked Truth About Your Money."

The undressed truth about saving money is that we simply have to seize every single opportunity to sock it away.

"We're always looking for one solution, but it's a cumulative effect," says DeShurko.

There is no magic bullet. Even those of us without much expendable income can afford to put $25 per paycheck into a 401(k) plan or a savings account, DeShurko argues. And if you have the money automatically deducted from your check chances are you'll never even miss it.

Beginning savers often trip themselves up by starting with a budget that only includes significant expenses, such as rent and utilities. The problem is that people tend to overlook everyday expenditures, such as bottled water and coffee. These little things add up, says DeShurko, and if you don't take note they're likely to blow your budget and leave you feeling defeated.

Some advisers tell their clients to concentrate on paying off their debts before they start saving but DeShurko says that's a mistake. The sooner you begin to practice saving the sooner you'll see its benefits. So start putting away at least $25 per pay period now, while continuing to pay the minimum monthly balance on your credit cards and student loans.

The most important rule? "The bottom line is that safety and security come with savings," says DeShurko. "You've got to get in the mindset that you'll get more satisfaction out of saving money than out of going out to dinner with friends."

By Marshall Loeb