Saving Money

Business Side

By Daryl Kulak

Originally published in Massage & Bodywork magazine, February/March 2007.

Okay, here’s your choice. You could buy that pair of fashionable shoes for $200, or put the money into savings. Which seems more attractive? Well, the shoes are right there. They’re beautiful, you tried them on, and they’re comfortable as heck. All your friends would notice them and compliment you. Or you could save the money.

Saving money is one of the hardest things to do in our consumer lifestyle. By definition, it means putting things off until later. Delayed gratification. When is it right to treat yourself and when should you be disciplined and put the money in savings?

Here are some ideas on how to save, why it’s important, and how to get past some of the most insidious mental traps around money that many of us encounter.

Why do we need to save at all? Can’t we just live day to day and spend what we make? There are three main problems with the short-term money mindset: emergencies, big purchases, and retirement.

The Emergency Fund

The carefree approach works for a while, but then a crisis hits. Your mechanic tells you your car needs four tires. You get sick and have to pay a hefty health insurance deductible all at once. You find out your child needs braces. All of a sudden, you need a stockpile of money and you don’t have it. “People who live on the edge, spending every penny they earn, tend to go off the deep end when a crisis occurs,” says Daniel Betts, financial planner for Smith Barney in Youngstown, Ohio. “You need cash on hand when things go wrong.”

Some people call this a “rainy day fund” or an “emergency fund.” Whatever you call it, you should have some money tucked away that you never intend to use except in an emergency. Keep it separate. In fact, it might be useful to have it in a separate bank account without ATM access.

You could use your credit card as your emergency fund, but the problem with that is the amount of interest the credit card company charges each month while you’re paying it off. Best to be your own lender with your own stockpile of money, if you can.

How much should you keep for an emergency fund? A few thousand dollars is great, but I’d say that everyone should try to keep at least $400. If your bodywork business is still in an early phase, this may seem like an outrageous amount, but here’s where the magic of persistence comes in. By giving up one cup of Starbucks coffee a week ($5), and putting that money in the bank, you’ll have more than $400 in less than two years. It doesn’t take much discipline to do that. And if you can put in more, it will build even faster.

Big Purchases

Once you have an emergency fund, you can move on to the next goal. Each of us is usually saving toward some big life purchase, whether it’s a car, house, computer, or college tuition for a child. But don’t overwhelm yourself. Tackle one big purchase at a time. If you’ve just graduated from massage school, chances are you’d like a house and a car and a computer, but start saving for just one of those. Perhaps you can get a cheaper, used car quickly and then move on to house savings.

You can save for big purchases the same way you saved for your emergency fund. Find small ways to reduce your expenses and put that money into the bank. Buy one less cup of coffee a week, prepare a meal at home instead of going to a restaurant, go to a less expensive barber or beauty salon. You will be absolutely amazed at how fast your “nickel and dime” approach will contribute to your savings account. Ten dollars here, fifteen dollars there—the next thing you know your savings will be in the hundreds and then the thousands. It is like magic, as long as you stay disciplined.

One of my favorite books on this topic is The Millionaire Next Door by Thomas Stanley and William Danko (Longstreet Press, 1998). They tell the stories of dozens of millionaires who got there simply by saving little bits of money here and there and living a simple life. This book is an inspiration that changed my life, and it may change yours, too.


The savings goal we all need to think about is retirement. This goal always seems so far away, so irrelevant to life at this moment. But it isn’t. A pleasant retirement can only happen if you’ve planned for it. Millions of retirees find that they didn’t plan properly and must continue working or scale back on their dreams to travel, relax, and enjoy life.

“Social security is shaky and pension plans are being phased out,” Betts says. “If you want to maintain your standard of living after you stop working, you need to have a structured financial plan to do that.”

The first rule about retirement savings is that it is never too late. If you are in your fifties or sixties, there is still a lot you can do just by beginning saving right now. Hopefully you will feel an urgency when you read this article, and be motivated to begin a disciplined savings plan that will help you once you wish to stop working.

If you are young, then anything is possible. As a person in your twenties, thirties, or forties, you can accomplish great things with your savings if you begin now.

Let’s use a quick example. If a young massage therapist begins a disciplined savings plan at the age of twenty eight, putting away $100 each month by cutting out unnecessary expenses, she can create a retirement nest egg of $271,000 by the time she reaches sixty-five. Keep this example in mind when you’re beginning your savings plan. Discipline and consistency is more important than how much money you’re putting away each month.

With emergency funds and big purchases, bank savings accounts are fine. But with retirement, you will want to look into stock market mutual funds. If those four words strike fear into your heart, don’t worry. There is a way to get help without paying much money.

Stock market mutual funds are a way for you to invest your money in the stock market with reduced risk. No investments in the stock market are guaranteed, the way that bank accounts are. The truth is, you could lose everything. But investing in a smart way, you can limit the possibility of that.

You have two choices when thinking about saving for your retirement using stock market mutual funds. You can do it yourself or you can get some help. I strongly suggest getting help, in the form of a financial planner. I’ve used financial planners almost all my life, and I have been so happy with the results, I can’t imagine what would have happened if I had done it on my own.

I continue to need help answering these questions:
• Which funds should I invest in?
• When should I take money out of a losing fund?
• How do I diversify my money?
• Should I invest in socially responsible funds?

Socially responsible funds are those that avoid investing in companies that don’t abide by certain values, or that specialize in companies that are good corporate citizens. Betts specializes in socially responsible investing (SRI), and he feels strongly that the way you invest can help reflect the values you hold. “For people with strong values and beliefs, it helps to be consistent with your values,” Betts says. “Holistic life is about harmony, and irresponsible investing can create an imbalance between the way you invest and the way you live.”

For me personally, using a financial planner makes all the difference. I feel so much more comfortable having a knowledgeable professional helping me make decisions about my money and connecting it all to my goals and values.

But, if you insist on doing it yourself, I suggest you use the Internet as your tool to learn what you need to know about investing. The best website I’ve found for this is called The Motley Fool ( This is a membership website that has a tremendous amount of information, as well as a way for members to help each other with investment decisions. My biggest problem with Motley Fool is that they tend to bombard you with e-mails and messages to buy more services and reports from them. If you don’t mind that, Motley Fool is the place to be.

If you’d like to get help, find a financial planner. The best way is to ask your friends who they like and trust. Personal references are the best. Find someone who has used a particular financial planner for at least five years, who has seen their investments increase during that time, and who feels they get good, conservative advice from their financial planner. With financial advice, the less flashy and flamboyant, the better. If someone promises you results too good to be true, stay away.

My preference is to choose a financial planner from an established firm, like Raymond James or Smith Barney. I feel more comfortable having the oversight of a large company.

Tax Advantages of Saving

The U.S. government wants to encourage us to save for retirement, so they’ve created several incentives to help us save. The most well known is the Individual Retirement Account (IRA). The benefit of an IRA is that you can deduct the amount of money you put in each year from that year’s taxes. Then, when you retire, you pay taxes on taking it out. It sounds like it would equal out, but it doesn’t. Your income today is likely higher than when you are retired and not working, so the tax rate will be lower. Plus, the money can grow each year without forcing additional taxes on you until later. Deferring tax payment is often a good strategy, and an IRA is one way to do that. You can open an IRA at a bank or with your financial planner.

If you work for a company, they may offer a 401(k) savings plan. This is very similar to an IRA, but has the added benefit of a possible “matching plan” from the company. Your company might offer to match the amount of money you put into the account. This is a nice way to boost your savings with help from your employer. If your company offers a 401(k), put in as much money as you can. You’re saving for retirement and reducing your taxes at the same time.

For the self-employed, there is the Simplified Employee Pension Plan (SEP). This is great for the single-person business or a business with just a few employees. It is a way to put away more money per year than you can with the IRA, if you have that much to save. And it is tax advantaged, like the IRA and 401(k). It is simple to set up; just see your financial planner for details.

Finally, I’d like to introduce you to a little-known type of savings account called the Individual Development Account (IDA). If your income is low (eligibility differs by area) and you don’t have much savings, a bank can set up an IDA for you where the dollars you put in are actually matched by the bank. “The idea is to help you save by doubling or tripling the effect of your investment. This is ideal for the person just starting out or struggling after a financial loss. Talk to your bank about an IDA if you think you fit this program. National City Bank, with branches throughout the Midwest and Florida, offers an IDA program to its customers, as do several other banks.


Saving money is part of leading a high-quality life. It just takes a little bit of discipline and some help from a qualified professional. Think about ways that you can start saving today, and then start planning for those wonderful golden years.

Daryl Kulak is author of Health Insurance Off the Grid, an easy-to-use guidebook for people who want to afford the holistic lifestyle. It is available as a free download at


Daniel Betts, financial planner at Smith Barney, based in Youngstown, Ohio, but has clients all across the country—; 800-535-0017.
Dave Ramsey’s money management radio show—www.dave to check your local listings or listen online.
Information on IDAs— security-income/spotlights/spot-individual-development.htm.
The Millionaire Next Door, by Thomas Stanley and William Danko (Longstreet Press, 1998).
Motley Fool, a membership Internet website with lots of information for the do-it-yourself investor ($99/year).
National City—Midwest bank that offers Individual Development Accounts (IDAs).
Online calculator to help you decide how much you need to save to accomplish your goals in retirement— mentplanner.jsp.
Yahoo Finance, free Website with information on investing—