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We encourage our kids to use piggy banks to save up for special purchases like bicycles and sneakers, but then we never consider taking our own good advice and employing the same means to save for ourselves as adults. But if anyone needs to save, it’s the grown-ups, even more than the children, because we are the ones with the strained budgets and awesome financial responsibilities and obligations to meet.

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There are some ways to save that use the same premise, but in more sophisticated ways. For example, “dollar cost averaging” is used by investors to average out the highs and lows of their stock market holdings, so that on average, they make more money than they would by trying to time the ups and downs of the market. This is done by buying a set dollar amount of stock at regular intervals of time, regardless of the price of the stock, and is most conveniently applied to shares of mutual funds, because they can be bought in dollar amounts that are sometimes easier to calculate.


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