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Live the America Saves Theme

February 24, 2012

By Joseph Montanaro, USAA Certified Financial Planner® Practitioner

The 2012 America Saves Campaign kicks off with America Saves Week Feb. 19-26. I often tell folks I’m living the dream, but now’s the time for you to focus on living the theme -- the 2012 campaign theme for America Saves. This year’s theme is “Set a Goal, Make a Plan, Save Automatically.” Here’s how you can do it:

Set a Goal. Whether you’re focusing on eliminating debt, building an emergency fund, or setting aside money for longer term goals like retirement, you need goals.  A goal isn’t a vague idea -- it’s a specific statement of what you will accomplish.  It should come with a date and a price tag. For example, “we’ll build a $1,000 emergency fund by December 1, 2012” or “by the end of the year we’ll eliminate $3,000 of our credit card debt.” Set it, but don’t forget it. Instead…

Make a Plan. Don’t over think this part. As a financial planner, I’ve designed thousands of detailed plans with clients. Some have been comprehensive plans that mapped out everything from tax strategies and portfolio weightings to complex estate planning techniques. Others were much less involved.  And while a complex approach may be necessary if you’re on the verge of a life event like military retirement or separation, many times it just doesn’t need to be that complicated. Following through on our examples from above, it might just be setting up an allotment for $50 per paycheck into a new savings account that allows you to begin building your emergency fund. For debt elimination, you could identify specific expenses you’ll cut or windfalls (tax return) that will go towards eliminating debt. This simple step will put you on the path to eliminating that debt throughout the year.

Save Automatically. This is easy. Most employer plans like a 401(k) or 403(b) offer a great way to systematically set aside money for retirement, but surprisingly, only about 40 percent of those under 24 -- those who can use a big ally, time, in their race to retirement -- take advantage of this type of program. Even if you only start with one percent of your pay and bump it up with every pay raise or promotion, you’ll be on your way to what could be hundreds of thousands of reasons to save. If your employer offers a Roth version of its retirement plan consider that as a tool that offers the potential to build tax-free retirement savings. No retirement plan at work? Thousands of banks or mutual fund companies will help you set up an automatic investment plan into an IRA or Roth IRA. Are you in the savings game? If not, get set up now. If you are, consider increasing your contribution.

The first step is the hardest. Visit www.americasaves.org/join and take The Saver Pledge: “I will help myself by saving money, reducing debt, and building wealth over time. I will help my family and my country by encouraging other Americans to Build Wealth, Not Debt.”  Live that theme!

This material is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing.

Investing in securities products involves risk, including possible loss of principal.

USAA or its affiliates do not provide tax advice.  Taxpayers should seek advice based upon their own particular circumstances from an independent tax advisor.

Examples given are hypothetical illustrations and not necessarily an indication of the benefits or features of any USAA product.

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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