Don't be discouraged if you currently have no extra money to put away. The secret to saving money is that there's no secret involved at all. By developing a realistic budget, setting spending and savings goals, and sticking to them, you can create money for savings.

Decide on a percentage of your income to designate as savings. Financial planners suggest 10 percent, but if 8 or 5 percent is all you can handle at this time, start with that. Don't make the mistake of thinking that if you can't save a large amount of money all at once, it's not worthwhile to try. This couldn't be further from the truth.

If you saved $25 a month at 6 percent interest, in five years you'd have $1,744. If you saved $100 a month at 6 percent interest, in five years you'd have $6,977; in ten years, you'd have $16,388. Even if you think you can't possibly save this much each month, you'll be surprised how much more money is available for savings as you continue to refine your budgeting and spending plans. It's okay to stretch to the point of discomfort, but saving shouldn't be painful to the point of making you do without things you truly need.

Strategies for Pumping Up Your Savings

Set up a separate savings account. If you mingle your day-to-day funds with your savings, it's almost inevitable that you'll end up using some or all of the savings, and you may never repay them. There's also a mental component. Seeing your savings balance grow from month to month and your financial goals becoming more of a reality is highly motivating.

If you have direct deposit at work and your employer allows you to split your deposit between multiple accounts, consider having a set amount deducted from your paycheck each pay period and deposited in your savings account. It's much easier to save when the money doesn't have to take a detour to your checking account before reaching your savings account. Out of sight, out of mind.

If you don't have this option at work, write yourself a check every month before you pay your bills, or set up an automatic draft into your savings account. Most Internet bank accounts will do this for free — they'll even pull money from a different bank. After a while, as you adjust your budget and spending, you won't even miss the money you're putting into savings.

Use windfalls to pump up your savings instead of spending them. Bonuses, tax refunds, rebates, overtime pay, income from hobbies or yard sales, cash gifts from family, lottery winnings, and other sporadic cash receipts can make faster advances toward your goals without requiring additional spending cutbacks. When you receive a salary increase, put all or part of it into savings each pay period and continue living on your previous salary. When you pay off a loan, continue putting the payment amount aside each month, but pay it into your savings account instead of to the bank or finance company. Because you're already in the habit of doing without that money, you won't even miss it.

Don't Be a Victim of Advertising

When shopping, decide on how much you have available to spend before you actually shop, and don't give in to impulse spending. With a spending plan, you don't need to deprive yourself of things you really need, but you should question whether you really do need them. Experts recommend these strategies:

• Don't use shopping as a form of recreation.

• Don't shop on impulse.

• For items you really do need, look for sales and special offers.

• Shop at outlet or discount stores and Web sites.

• Before buying appliances, electronics, computer equipment, and other expensive items, research them in Consumer Reports or other magazines that do consumer reviews.

• Do some of your shopping at a warehouse club, if there's one near you.

Avoid the Holiday Hangover

If you're like most people, you tend to go overboard on holiday spending, but you can avoid overspending on gifts by setting spending limits. Using your budget, figure out how much you can realistically afford to spend on gifts without going into debt. Make a list of all the people you'd like to buy gifts for, including the small gifts for babysitters, teachers, newspaper carriers, and so on. Set a limit for each person on your list, then add up all the amounts and make sure they don't exceed your overall spending limit. Try to allow a cushion for unexpected items or price fluctuations. Don't get caught up in the commercialism that's rampant around the holidays, or you may have to deal with a depressing amount of debt when the holidays are over.

Finding the Fat

You may think there's no fat in your budget, but nearly everyone can find some if they look hard enough. Consider it a challenge to find ways to cut your expenses, or make a game of it. If you smoke, why not quit? Smoking is one of the most expensive habits you can have; many couples spend as much on cigarettes as they would on a new car payment each month.

Speaking of car payments, ask yourself if you really need the gas-guzzling SUV you drive. You could save considerable money on gas, repairs and maintenance, and insurance, not to mention your monthly car payment, if you bought a less expensive, more fuel-efficient vehicle. You might even get some tax benefits.

Consider buying used instead of new. Check the classifieds for things such as exercise equipment, vehicles, musical instruments, electronics, and more. There are always people who have made the mistake you're trying to avoid by buying something they ended up not wanting or needing. You can often get great bargains on items that may be as good as new.

The list of ways to save money is endless. As you get into the habit of questioning every expense and looking for ways to cut costs, you'll develop a saving mindset and you'll see the savings add up. You've discovered the “secret” to saving.

Saving for Large Purchases

There are a number of benefits to saving for a big purchase rather than buying it on credit. First of all, you have plenty of time to change your mind about whether it's something you really need or want. Have you noticed how many backyards have unused swimming pools or hot tubs? If you run right out and charge the item to your credit card or take out a loan, you'll be stuck paying for the item for a long time. Paying cash also gives you the satisfaction of really owning the item, and you'll pay much less for it because you won't be paying interest.