Savings Plan Checklist

FYI: *Pay down your debt. Concentrate on the balance with the highest annual percentage rate (APR), then move on to the next-highest rate.

*Pay your bills on time. Financial missteps—a late payment, a delinquent account—remain on your credit report for seven years and can prevent you from getting approved for a mortgage or loan.

*Open a savings account and contribute five to 10 percent of each paycheck to the account.

*Elect to put 10 percent of your paycheck into a 401(k) retirement program if your company offers one. The money comes directly out of your paycheck, you don’t pay taxes on it until you retire, and employers often match part of your contribution. If your employer doesn’t offer a 401(k), open an individual retirement account (IRA) at your bank or with a mutual-fund company.

*Once you’ve paid off your debt, consider investing in the stock market or in a mutual fund. If you can’t commit to tracking stocks regularly, opt for a mutual fund, an account managed by a professional aiming to increase the dollar amount by about eight percent each year.

*In the event you receive a windfall of money, allocate the funds with this hierarchy in mind: debt, savings, consumables. One formula: use at least half of it to pay off debt and split the rest between savings and consumables.