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by
John Hawkins

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December 2, 2011 - 12:01 am
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When you work for yourself and don’t have the option of living paycheck to paycheck, you’re forced to start learning how to take better care of your money.

There are some tricks that can help you out with that. Writing down every dime you spend for a month or using websites like Mint.com can give you a clearer perspective on where your money is going. Setting back enough cash to cover six months of expenses with no income coming in can also give you a lot of peace of mind. It’s great to know that if you have a major car repair or your income dips unexpectedly for a few months, you’re not going to be struggling to pay your bills.

But the real key to socking away the dough is to think incrementally. The big checks help a lot, but as often as not, it’s the small savings you make over the long haul that really pad your bank account.

Think about it like this: You’re likely to work five days a week for at least 40 years, probably even longer than that for people under 40. So 40 times 260 working days a year equals $10,400. In other words, if you can find a way to save a dollar a day, that’ll amount to an extra $10,400 dollars over the course of your working lifetime — much more if you invest the money.

Here are some ways to start putting more money back. Although most of them won’t seem like huge difference-makers at first, over time they’ll really add up.

1) Buy used cars: The average cost of a new car in 2009 was $28,400. In most states, $28,400 is more than half the median household income for an ENTIRE YEAR.

So, let’s do a little comparison. One person buys a new car every five years. Another person buys a used car at half the price, takes care of it, and keeps it for a decade. After a 10 year period, the first person has spent $56,800 on transportation. The other person? He’s spent $14,200. What could you do with an extra $42,600?

Let’s take those numbers 40 years out. $42,600 x 4 = $170,400. That alone is bigger than the nest egg most Americans have saved up when they retire.

Not really a good choice for a first car.

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