My mother taught me to budget looking forward 12 months at a time. Big ticket items (such as furniture or vacations or cars) were planned for by dividing the amount by the six or twelve (or more) months it would take to save for the item, and then moving that planned spending into a savings (now money market) account. Today, while I may not always use her savings model as well as she did, I still use her spreadsheet (albeit in Excel), rolling it forward every month for the next twelve months, to see what (and when) my family can afford to spend on big ticket items after our fixed and estimated variable monthly expenses. My mother died this past May — with no outstanding debt.

The best piece of financial advice that I ever received was “Pay yourself first.” When I first heard this I wasn’t quite sure exactly what they meant. It finally sunk in that what they were saying is to start saving by making it an expense to yourself. Most people when they sit down each month to pay their bills pay their house payment, their phone bill, their credit card and other expenses but never set any money aside for themselves. Saving through systematic investing is the best way to make sure that you actually put money aside for yourself. I recommend most people have a deduction from their checking account each month to make sure that they do it. Many mutual funds allow you to invest as little as $50 per month if using automatic debit from your bank account. You can either do this through a taxable account or in an IRA (Roth or Traditional). The younger you start paying yourself, the faster your account value will grow.