海角大神

With the utmost respect and honor to Stephen Covey for my very similar title (Covey鈥檚 鈥�7 Habits of Highly Effective People鈥� is on my recommended聽reading list), I鈥檇 like to talk about habits. Specifically, good saving habits that could put you in a position to retire on聽your聽schedule 鈥� early, if that鈥檚 what you want to do, or whenever you鈥檙e ready to exit the workaday world.

1. Pay yourself first

Highly successful savers maximize their retirement plan at work, or they create one if they鈥檙e self-employed. Some self-employed people manage to put away more than $50,000 a year in a聽Solo 401(k). They also frequently enable and fund spousal IRAs, Roth IRAs and/or non-deductible traditional IRAs that convert to Roth IRAs.

2. Practice frugality

Many successful savers grew up in households that clipped coupons, bought things only when on sale or used, and practiced group discount behavior (multiple families sharing things). They continued these practices as adults, mirroring their parents or even taking things to a higher level.

3. Track expenses

People who closely track where their money is going can see where a change might have the biggest impact. Bloated cellphone, cable/satellite and Internet service plans are perfect examples of where families might be able to cut spending and save the difference. In my own case, I bought a new聽life insurance聽policy to replace a more expensive older policy after contacting my agent to see how I could lower this expense.

4. Attack debt

Paying off debt to free up more cash to tuck into savings is a wonderful tactic because it鈥檚 easy to see progress and ultimate success. Even when financing with very low or no interest for cars, for example, the habit of paying off quickly puts savers on track for larger savings. I like the 鈥渟nowball鈥� method of debt elimination 鈥� ordering your debts from smallest to largest (or from highest interest rate to lowest), and then knocking them out one by one.

5. Draw up a financial plan

Yes, this may sound a little self-serving, as I鈥檓 a financial planner. But successful savers usually have a聽road map聽so they can follow their progress. By putting saving goals in writing and knowing where they are in relation to those goals, savers can recognize when changes are necessary 鈥� or can celebrate being ahead of schedule.

6. Read personal finance media

The most successful savers are always looking for new ideas and new ways to reach their goals sooner and with more assurance. One of the reasons we give our clients subscriptions to magazines such as Money or Kiplinger鈥檚 Personal Finance is to聽expose them to ideas聽鈥� show them what they should (and shouldn鈥檛) be doing. We also tweet articles that can help them meet their financial goals, including saving.