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Make your money work for you — start saving now!

Joe Jones’ column “Personal savings rates dismal in the good ol’ U.S.A.” in the Mississippi Business Journal’s June 19-25, 2006, issue caught our attention at Consumer Credit Counseling Service (CCCS) of Jackson.

We also saw A.G. Edwards’ “Nest Egg Index” on the Web site CNN Money, indicating Mississippians are at the bottom of the barrel in terms of saving for the future.

Then a study commissioned by Merrill Lynch & Co. Inc. told us that 77% of Baby Boomers believe they are setting aside too little for their retirement.

We just had to chime in to say — Mississippians, start saving now! It is never too early, or too late, to start saving.

Of course, the nest egg-building process works a lot better if you start putting money away early in life. But it always makes sense to participate in your retirement plan at work and — the CCCS mantra — to keep your personal debt low. The idea is to earn interest, not pay it!

At Consumer Credit Counseling Service workshops and seminars, we always encourage employees to contribute to their company-sponsored 401(k) plan. And Doug Ralston, president of Trustmark Investment Advisers Inc., agrees.

“That is the easiest and most efficient way for most people to build worthwhile savings for their retirement,” Ralston said. “Many financial planners agree that to build a minimum nest egg for retirement requires saving about 10% of one’s salary. Saving 15% may provide a sensible retirement; and to retire in comfort could require annual savings of 20% or more.”

Let’s consider the advantages to contributing to a 401(k) plan: contributions are made with pre-tax dollars, the account compounds on a tax-deferred basis, and many companies will match employee contributions.

Whether you are retiring in three or 30 years, you should get in the habit of saving now. With compounding interest, your savings can grow quickly. For instance, a $50,000 lump sum invested at 10% will grow to $100,000 in about seven years and to $200,000 in less than 15 years.

CCCS suggests the following smart savings tips.

Keep your eyes on the prize

Regularly remind yourself of why you are saving. You should save for both medium-range goals (a vacation, a new car) and long-term plans (a down payment on a house, college tuition, retirement). Inspire yourself with a picture of your dream house, vacation or car on your computer or refrigerator.

Pay yourself first

This is one of the first rules of saving money. Each pay period, write a check to your savings account or have money automatically transferred. You can also make automatic investments with many mutual fund companies.

Keep paying loans

Once you have paid off a loan, continue to make the same regular payments to your savings or investments account.

Unexpected money

If you get a “windfall” raise, refund, gift or win a lawsuit — invest it. You managed without that money before — and it will be worth more later.

Adjust your withholding tax
Make sure your W-4 form is filled out to your best advantage. You can be saving or investing that moneyeach pay period rather than letting the government hold onto to it until tax refund time.

Put your money to work for you

Ideally, you should have the equivalent of about three months’ worth of expenses in a savings account. Any additional money should be invested or put into a CD or other high-yield investment.

Reduce monthly fees
Explore your options on all those monthly fees for checking accounts or phone, cable, online services and eliminate any you can do without.

Cut corners

If you save $20 a week by bringing your lunch to work and/or using coupons, put $20 into savings. Keep looking for little ways you and your family can cut corners and save for big expenses such as vacations, graduations or retirement.

Keep debt low

Debt for education or a house is an investment in the future. Credit card debt is a drain on your resources — so keep it low or pay it off.

Mississippians can get a free budget counseling session by contacting CCCS Jackson at (601) 969-6431, 1-800-251-CCCS or www.cccsinc.org. Let’s do a better job of planning, saving and investing — and get Mississippi out of the bottom of the savings barrel!

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