It’s not uncommon for home-based entrepreneurs to have difficulty saving for the future, especially when they’re too busy funneling their savings into the present. Michael Fischer, author of Savings and Investing: Financial Knowledge and Financial Literacy that Everyone Needs and Deserves to Have!, offers the following six tips for saving money:

1.      Understand the world of finance. Nothing can replace knowledge — and fortunately saving, investing, and finance are pretty straightforward if we get the complete picture once.

2.      Start ASAP. Like any major positive initiative, the sooner we start, learn, and execute, the better. In the case of money, compounding is one main reason.

3.      Automate parts of the process. Money that goes directly into a savings plan often isn’t even missed — just like small extra amounts seem to disappear as well. 

4.      Use government tax incentives. Saving in a pension plan such as a 401(k) immediately turns $75 into $100 for someone in a 25 percent tax bracket, and the money grows tax-free as well.

5.      Diversify. There is always some uncertainty in investing — diversification is necessary.

6.      Make small amounts count. Small amounts saved every day can add up to very large amounts with compounding — $5 per day can mean saving $1,825 a year, which with a 5% return, will turn into over $20,000 in ten years, or over $60,000 in 20 years. HBM

Source: www.SavingandInvestingBook.com

Previously published in the April 2007 issue of HOME BUSINESS® Magazine, an international publication for the growing and dynamic home-based market. Available on newsstands, in bookstores and chain stores, and via subscriptions ($15.00 for 1 year, six issues). Visit www.homebusinessmag.com