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One of my several goals for the new year (resolution if you will), is to save X amount of dollars. Now, in the past I have set a similar goal, but in the end always come up short. As part of ensuring I meet my annual goals, I have taken a project management approach to this (yes, engineer over here). That means not just having goals, but creating a detailed plan on how to attain my goals.Previously, I have missed my savings targets largely due to "unforeseen" expenses that occur. This year, I have risk management plans (what to do when these unforeseens arise) to help me be prepared. Additionally, my target isn't to save just X amount, but X for savings in this account, Y for vacations in this account, Z for holidays/birthdays in this account.My plans include several different options including high interest savings, mutual fund investments, stock ownership, and retirement. I'm curious what others on here do to manage and plan for their savings. I'm looking for some details here (such as I prefer to put my money in a pickle jar and bury it in the back yard here).Other strategies or ideas that can help me with risk mitigation and unforeseens?

Savings? What's that? Oh ya, back in '85 I think I had some of that.

Considering I work finance for an HR company that outsources, i.e. my two clients are the Federal Reserve and John Hancock Investments. I work solely with their payroll, 401k, roths, IRAs, savings, match, loans, asset transfers, etc.Any specific questions you need let me know and I can probably help ya out. As far as what you are looking at, sticking to the basics is really the best way to start. Spread your money too thin and it will have nothing to gain on. If you have 401k with matching at your company, start by budgeting yourself to give the MAXIMUM that you can invest. If they only match up to say 4%, and you can put in a max of 6% from your pay. Then you put in 6% and let them match the 4%. You always AT LEAST want to be putting in what they are matching you at. So 4 for 4 would be the MIN.Make a Budget. I mean a real budget. Something solid, that details every penny you spend per paycheck. CC bills, phone, gas (always embellish your gas cause you never know when that extra tank is needed for a trip), food, everything. Then spread it out by when bills are due vs. when you get paid. Maybe you pay your car bill and phone in the beginning and insurance and others towards the end. Next setup your amount available after expenses. Expenses come first. Then you pay yourself, then you spend. Paying yourself could mean simply dumping your money into a savings account at your bank. Or it could be investing in a separate mutual fund for long term. The orange savings accounts are nice, but again, you need to keep your money in them for awhile to really accumulate wealth. If your bank offers what BOA (my bank) has, which is the round up and save plan. They literally round up all your debit card purchases to the nearest dollar and put that in your savings. Spend $1.50 on gum, they round it to $2.00 and drop $0.50 in your savings. Then match it 3 or 4% at the end of the year based on your total. This past year they matched me $250! I was given that by my bank for using this service, awesome!Or if you are worried about overspending, don't use your debit card. Take out your alloted amount set by your budget in cash. Once it's gone, your done, no more for spending.As far as saving for XYZ, you really need to start with the basics and get a full budget setup and then figure out from your pay how much is going to a 401k, mutual, or long term high interest savings. How much you can put into your own personal savings account as a buffer for unexpecteds like that car tax bill or an accident or something else that may pop up. Then whatever you have left, make sure it is a little extra cause if you spend it all, then your not really making headway. Let's say you give yourself $100 a week to spend on anything, liquor, food, etc. Try and keep $25-$50 of that each week, it will add up and end of month you can drop it back into your personal savings or send a check as a contribution to your 401k plan as either a lump sum contribution or the like.Personally I do the following. My company matches up to 6%, I put in 8%, with a potential max of 10%. I have a whole budget laid out months in advance. My father has one laid out for the next 5-10 years!!! Anyways, I also have my keep the change savings program I mentioned above and I save about $25 a month on average. I picked up a second job barbacking and will make about $1,000 a month extra from that. All savings money. I cut back on my spending weekly so I can put more towards my CC bill. And I use my debit card instead of cash cause I get to save from it. Guess I'm good at more than just washing cars P.S. - on a side note, I always go by the rule of thumb when you get raises or bonuses or even your tax return. The rule of 1/3's. Pay yourself a third for spending, a third to your savings, and a third to your 401k.

Thanks for the input Whelan. I already follow most of this advice. I, too, have BofA and use their Keep The Change plan - I think it's great! The first year, they matched $304 but since then they don't match anywhere near that (it was 100% at first and now is significantly lower).I contribute to my companies matching 401(k) at 10% - they match 80% up to 6%, making my effective contribution nearly 15% to 401(k).But my savings goal is for more accessible money as I absolutely refuse to be put into a position to require a loan from my 401(k). The 401(k) also isn't very solvent should I need the money quicker. I am trying to not think of my 401(k) as savings, given that I consider my savings as an emergency pool of money.What I've done for this year is to set up two additional accounts. The first is a money market savings account that provides what I'll call 1 to 3 year money. The second is a high interest savings account available through an online bank (pulling in an APY of 5.22%). This money I'm considering my 10-30 day account and is really attempting to act as my solvency account.The high-interest savings offers a relatively high reward for moderately easy to access emergency cash. The longer I go without touching it, the greater the reward. The money market account is easier to access than the savings, but since it has a higher projected rate of return, I am less inclined to touch this one first.Both of these new accounts are directly funded out of each and every paycheck through direct deposit. It ensures that I pay myself first. Should I need to dip into savings because of a poorly planned budget, then I'll go to the high-yield savings. I feel that having both accounts will keep me with a higher overall savings rate, despite splitting my money and reducing potential for the magic of compounding interest.Budgeting has proven a lot harder for me. Last year, I had a set budget and stick with it very well until about June. In June, my fiancee became really sick and missed two months worth of work. When she finally returned to work, it was at half time. Now, I have to work to contribute every dime to our joint account as each day brings the new stress to me to ponder if she will be well enough to work today (She has been battling Crohn's and IBS).Anyone else out there have any strategies they employ?

"I contribute to my companies matching 401(k) at 10% - they match 80% up to 6%, making my effective contribution nearly 15% to 401(k)."If you are not contributing to a ROTH IRA, it would be better to do the 401(k) to the 6% match, and then put the rest in a ROTH IRA (up to $4,000 for 2007 plus an additional $1,000 if age 50 or above; for 2008 $5,000 plus an additional $1,000 if age 50 or above). You don't get a tax break on the initial contribution, but when you take it out all (including the growth) is tax free.The problem with a 401(k) and a regular IRA is that when you take it out all is taxed as ordinary income even though a lot of the growth is long term capital gain that would be taxed a max of 15% under current law if outside a retirement account. For the past ten years I have funded my SEP at 20% and also contributed the max to ROTH's for me and my wife. Those ROTH accounts currently represent $100,000 of tax free money that I can take at any time (since I am over 59 1/2). Also - there are no required minimum distributions for ROTH IRA's at age 70 1/2.Some companies now have ROTH 401(k)'s. I wish those were around when I had my day job.

I have:401K (my wife too)IRA (wife too)BondsSavings AccountAll this seems to work and we seem to be above the norm for people our age.

I should've been more specific - I invest in my company's ROTH 401(k)...I also invest in EE Series Municipal bonds (tax free interest!)...payroll deducted at $50 a paycheck...not much but it's a start. Also, bonds aren't that liquid either. You can get the cash you put into them if needed, but ideally you wait the 8-10 years for them to mature...

Quote, originally posted by engineertwin2 »I should've been more specific - I invest in my company's ROTH 401(k)...I also invest in EE Series Municipal bonds (tax free interest!)...payroll deducted at $50 a paycheck...not much but it's a start. Also, bonds aren't that liquid either. You can get the cash you put into them if needed, but ideally you wait the 8-10 years for them to mature...ROTH 401(k) Confused in regard to "Series EE Municipal Bonds"Do you meanm Serie EE U.S. Savings Bonds? Those are not tax free - you pay the tax on the earned interest when you cash them in or when they mature.

I disagree on the Roth 401(k) for most people. If you assume equal income tax rates currently and at retirement, the Roth and traditional are a wash. This is easily modeled in an Excel spreadsheet.Many people assume taxes will go up in the future, and they might. But what matters is the marginal tax rate. For someone retiring on their 401(k), personal savings and social security, it is unlikely their taxable income will be high enough to cause them to be in a higher tax bracket than they are now when they are working full time.As soon as the post retirement tax rate assumption is anything less than the current tax rate, the traditional pre-tax 401(k) outperforms the Roth.Also, with the Roth you are giving up a current tax benefit for the promise of a future tax benefit. But Congress can change the law anytime they want. Roth might not always be tax-free. Roth is another form of government deficit spending. Using Roth they are getting you to pay taxes on your retirement savings now, but then the govt won't have that tax revenue on Roth distributions in the future.I recommend Roth all the time for wealthy invididuals. They are the ones most likely to be in an equal or higher tax bracket after retirement, and many of them will not need their Roth savings as part of their retirement income. Because Roths do not have to make required minimum distributions at age 70 1/2, they can accumulate until death and then provide a tax-free income for heirs.Engineertwin, everything you've described sounds good. I'd suggest changing the 401(k) to pre-tax, this will reduce your taxes and increase your paycheck. Save this tax reduction as either more 401(k) savings or additional savings in one of your other savings accounts.

Thanks for the input Jim. I've been so back and forth on the Roth 401(k). This at least gives a different opinion than most people just saying "go with Roth".Jake, my post is missing a word - EE Series AND Muni Bonds. The EE's are deducted $25 and the Muni's are deducted $25 from each paycheck.

To: JimincalifI share your distrust of Congress. That's politics. Poli means many, and tics mean blood sucking insects. Certainly defines Congressmen.I think Congress is more likely to increase tax rates in the future than to directly break the promise of a ROTH IRA. I doubt that any diligent savers will be in a lower tax bracket in retirement.Congress can be expected to tinker around the edges - such as retroactively making ROTH withdrawals "income" for the purpose of determining how much of your soc sec is taxable, how large a Part B Medicare premium you pay, etc. Heck, they may take ROTH withdrawals into account in a future plan to reduce the soc sec benefits of the "rich". They could still say with a straight face, we're not taxing your ROTH. That's politics as heretofore defined.This has been going on for years. One kid works hard, saves a lot of money for college. Ends up being ineligible for aid. Another kid spends it all on cars, girls etc. That kid is broke so he gets aid. Put in $10,000 pretax, get a $2,500 tax break. It grows 5x. Take that $50,000 out in retirement, get $37,500 after taxes. [Net out of pocket cost $7,500]Put in $13,333 pretax, get a $3,333 tax break, It grows 5x. Take that $66,665 out in retirement, get $50,000 after taxes. [Net out of pocket cost $10,000]Put $10,000 in a ROTH 401(k), It grows 5x. Take $50,000 out in retirement, keep all $50,000. [Net out of pocket cost $10,000]The benefit is that with a ROTH 401k you have essentially been able to save more money. Aside from the free money of the employee match, if we could count on the LTCG rate staying a max 15% we might all be better off buying stocks outside an IRA. But LTCG can push other income into AMT.I assume the employer 401k match is not "ROTH" (unless the employee is taxed presently on that match) so that share would be taxable but I really don't know how that works.One other unknown - state income taxes. If in a high tax state when deducting 401k, and move to a low tax (or no tax) state in retirement, might give an edge to pretax 401k.

I agree with your comments re Congress and potential tinkering for political purposes.Quote, originally posted by jake75 »Put in $13,333 pretax, get a $3,333 tax break, It grows 5x. Take that $66,665 out in retirement, get $50,000 after taxes. [Net out of pocket cost $10,000]Put $10,000 in a ROTH 401(k), It grows 5x. Take $50,000 out in retirement, keep all $50,000. [Net out of pocket cost $10,000]Here is where we differ. In both cases you have to earn $13,333. In the first example, you put it all in 401(k). In the second example you pay $3,333 to the govt and put $10K in the Roth. In the first example you've reduced your take home pay by $10,000, in the second example you've reduced your takehome pay by $13,333 (the $10K to the Roth and the $3,333 to taxes.)To equate them, reduce the Roth contribution to $7,500. This reduces your take home by $10K ($7,500 to Roth, $2,500 to taxes). Now your take home pay is the same as your pre-tax $13,333 savings. Grow the $7,500 5x and get $37,500 out tax free, equivalent to the pre-tax savings (for the constant 25% tax rate).Jim

Actually we don't differ - I agree with your analysis.I am now convinced that the only benefit of a Roth 401(k) is that with a ROTH 401k you effectively are able to sock more money into the retirement plan by trading the pretax savings of the contribution for the larger net payout (larger because it is not taxed).I also agree that if Congress screws over us as has happened int he past that might turn out to be a bad plan. Furthermore if you move to a state that doesn't have an income tax (like Florida) the tax free feature of Roth withdrawals is lessened. On the other hand if federal income tax rates increase to cover the deficit that may counter some of the above.And again on the other hand if the unexpected happens and the U.S. moves to a flat tax, or substitutes a consumption tax for the income tax, those with Roth 401(k)'s really get the short end of the stick.As for a Roth IRA, in addition to a 401(k), it is still a good deal for those of us who are not able to fund a deductible IRA. I cannot see why anyone whe is not eligible for a pretax IRA would not opt instead for the ROTH IRA. The real bottom line is that the blood sucking tics in Congress have made all of this too complicated.

Quote, originally posted by Raven »Savings? What's that? Oh ya, back in '85 I think I had some of that.+1 My advice is do *NOT* use your credit cards. I never used them since the Refi. I don't ever want to fall in that bottomless pit again.

Quote, originally posted by jake75 »As for a Roth IRA, in addition to a 401(k), it is still a good deal for those of us who are not able to fund a deductible IRA. I cannot see why anyone whe is not eligible for a pretax IRA would not opt instead for the ROTH IRA. Agreed. Fund all the deductible options available, and if you can, fund Roth too. It is not a bad strategy to have both Roth and pre-tax available going into retirement. In theory you could pull income from the pretax in years where you have lots of deductions and pull income from Roth in years where you have minimal deductions and higher taxable income.Quote, originally posted by jake75 »The real bottom line is that the blood sucking tics in Congress have made all of this too complicated.You got that right. I've been working in the retirement plan area for 28 years and the complexity has grown beyond anything reasonable, translating to higher costs for participants and companies.