Making Lemonade Financial Section Prince Charming

OVERCOMING THE PSYCHOLOGICAL BARRIERS TO SAVING

Barrier #3. Lack of self-confidence

It's easy to save if you believe in yourself and your goals. But if you lack confidence in yourself, you may not save at all. Many people tell themselves that they will begin to save when their income rises, but few ever do. Unless you put yourself first, when you make more, your expenses will inevitably rise to meet your income and nothing will be left for you.

To overcome this barrier, persuade yourself that you deserve to keep a portion of your income for you and your future. Once you truly believe that, make a commitment to set aside 5 or 10 percent of all the money you receive in a special account that's just for you. Just as some people tithe to church or charity, so should you tithe to yourself. You're worth it.

Barrier #4. Lack of knowledge

Most people lean little at home or in school about money, investment, and personal finance, and those people rarely seek formal training in finance as adults. Unable to make financial decisions and reluctant to enlist the help of experts, they accumulate their savings in low-interest bank accounts, or else spend everything so there's nothing left to invest.

If you are hampered by lack of financial knowledge, begin by learning about your personal income and expenses. You can begin to save if you reduce your expenses. Fin out where your money goes by tracking last year's expenses, and then decide where to trim.

Barrier #5. Procrastination

Procrastination comes from fear, not laziness. Procrastinators put off saving, or go on spending binges as soon as they accumulate much of a nest egg. They buy books and magazines about personal financial and investments, but they never seem to get around to reading them. Because the responsibility of money makes them uncomfortable, they delay learning about it.

To overcome financial procrastination, begin by setting some minor goals, such as reading one article or newspaper column a week on financial maters, then add more substantial goals, such as devoting three hours to preparing a budget and an hour or two a month to monitoring spending. Soon you will find yourself gliding painlessly into the world of finance, and you will be ready to begin your savings plan.