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Yahoo! Finance Features Comments by Melissa Walsh

For an article titled, "12 Simple Moves That Can Put You on Track to Millions", reporter Cody Bay spoke with Melissa Walsh about ways to effectively save and grow your money. Her comments in the article are excerpted below:


"Save Your 'Extras'

For people who get paid every other week, twice a year, you receive an "extra" paycheck. Melissa Walsh, founder and president of Clarity Financial Design, suggests socking those special third-monthly paychecks away. "Not only is this approach wise from a budgeting standpoint, but it also allows you to save about 7.7% of your income per year -- well on your way to that home purchase, a special vacation, or successful retirement," Walsh said.

Similarly, Walsh said you should plan to save at least 50% of your annual bonus or incentive pay, and the entirety of your tax refund. "Whether you build up your emergency reserve, fund your retirement savings, or save in a sinking fund or investing account, put the money that you receive toward your long-term goals instead of the short-term gratification of a major purchase - which probably won't make you happy anyways," Walsh said.


Plan a No-Spend Weekend

One of the easiest ways to get a jump-start on savings, Walsh said, is to plan a spending holiday. "Dedicate a weekend to doing fun, free activities, eating the food you already have, and enjoying the company of friends and family," she said. "Not only will this practice allow you to save some money that you otherwise would have spent, but you can also use this practice to build consciousness into your spending habits and consider whether your usual spending aligns with your identity and purpose."


Use a Cash-Back Credit Card

Rewards cards that help you rack up airline and hotel points can certainly be tempting for helping to fund a vacation. But Walsh said a better option for building wealth is to choose a cash-back credit card and save or reinvest the cash rewards.

Look for cards with a good cash-back percentage, such as the Amazon Prime credit card, which offers 5% cash back on purchases at Amazon or Whole Foods for Prime members, and the Fidelity credit card, which offers 2% cash back. "I personally use this card and redeem the cash directly into my daughters' 529 college savings accounts, but the cash can also be directed to a brokerage account, IRA, or charitable giving account," Walsh said.


Avoid Lifestyle Inflation

As your income increases and your savings builds, so might the temptation to spend, Kline said. "It's easy to fall into the trap of increasing spending on unnecessary items and experiences," she said. "By keeping lifestyle inflation in check and focusing on long-term goals, one can save more and build wealth faster."

To resist the temptation, Walsh said you should save 50% of each raise you receive. "Being disciplined about saving half of each raise helps you grow your savings and reduce the lifestyle creep that can happen during early- and mid-career income growth," Walsh said.


Focus on Your Values

Throughout their savings journeys and whatever individual steps they take, Walsh helps her clients stay focused on their goals by identifying two or three phrases relating to their core financial values.

"To get started, consider things like security, independence, confidence, flexibility, family time, travel, community, giving back, and leaving a legacy," Walsh said. "What matters most to you? What motivates you? Once you've identified a few of these values, carry them with you."

You can write them down and put them in your wallet, use secure versions of them as your internet passwords, and revisit them regularly. "Remembering what your financial purpose is will help you align your spending, saving, and investments with your values," she said.




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