Getting into the savings habit

AS WE GET further away from the horrors of the Great Recession, it becomes easier for Americans to fall back into bad financial habits.

And one of those bad habits was not putting enough into a rainy-day fund. Even when money is tight and you are trying to pay off debts, you have to save. To help people understand the importance of savings, many organizations are planning events for America Saves Week, Monday through March 1. The slogan for the nationwide effort is "Start Small. Think Big."

It's appropriate. I know that for many Americans, finding money to save is tough. When experts recommend that you save at least six months of living expenses, I see people take a heavy breath. I see in their eyes the impossibility of saving enough to meet that goal.

But don't freak out about the big number. Start small. My grandmother Big Mama used to say, "You can't have a dollar without a penny." Small savings over time do add up. To start, aim to save one month's worth of expenses. Then, as you get extra money, add it to your emergency pot.

Bankrate.com takes the pulse of people's financial health each month through its Financial Security Index. In the latest index, the site found that more than 25 percent of Americans have more credit-card debt than savings. The lack of savings is "a reflection of the stagnant incomes, long-term unemployment and high household expenses," said Greg McBride, Bankrate.com's chief financial analyst.

During America Saves Week, consumers can follow a daily plan to get started. Here's how:

* Monday: Make the choice to save, then figure out where you can cut expenses to find funds to put away. This means doing a budget. You can't save if you don't know where the money will come from. Go to www.americasaves.org and search for "54 Ways to Save Money." You'll find tips to save in a number of areas, including on food, insurance, prescription drugs and your cable-TV bill.

* Tuesday: This is the day you decide to finally develop a plan to pay off your debt. I like a system I call the "Debt Dash." List all your debts, starting with the one with the lowest balance. Target that debt first, while making the minimum payments on all the others. I've found that if people can quickly pay off a debt - like running a 100-yard dash - it gives them a psychological boost that motivates them to act faster to knock the rest off their list.

* Wednesday: Now that you've spent two days figuring out where to cut, it's time for action. Automatically deposit money from each paycheck into a savings account. Start with $5 if you have to, but try saving 2 percent to 5 percent of your net pay.

* Thursday: Review your retirement-savings goals. If you have access to a workplace retirement plan such as a 401(k) but aren't participating, start saving in it today. If you already save for retirement, increase the amount by 1 or 2 percentage points. If you can - because you've done your budget and made some big cuts - max out your contributions.

* Friday: If you're getting a tax refund, earmark some or all of it for savings. Someone recently asked me if her $1,200 refund should go toward debt or savings. She said she didn't have an emergency fund but wanted to make a dent in her debt. I told her to do both, save and pay down the debt. If you don't save something and an unplanned-for expense arises, what are you likely to do? Get further into debt. And the IRS has made it easy for you to split your refund automatically if you want to put part of it into a savings account. Use IRS Form 8888.

* Saturday: Assess your progress. You get Sunday off. But if you procrastinated, use the weekend to take some action.

On the America Saves site, take the pledge to save. You can even get text-message reminders. And share your savings stories with me on Twitter @SingletaryM.

Wealth happens, when you save.