This week, I've been busy shooting an MSNBC special on money management. So, because this is on my mind, I thought I'd share some thoughts on how to get started with saving and investing. These are just a few tips to begin with, and they also help maintain my promise to Rev. Sharpton and company that I would do what I could to encourage all of "us" to start saving.

As my grandmother said, "if you are a spender rather than a saver, you will always be broke. This has nothing to do with how much money you make" – my grandmother never went to college and never made a lot of money, but she never had an empty bank account. I eventually obtained a Ph.D. in finance, but I learned everything I needed to know about saving from her. Here are some thoughts on how you might want to begin your saving program:

• Understand your weaknesses first, and then design the plan to eliminate them.


All of us have weaknesses, but that is no excuse to stop trying. Lay out the honest reasons you think you're not meeting your financial goals and then attack them one by one. After you have determined where your weaknesses lie, you must then design a plan that is tailor-made to confront your problem areas. For example, if you realize that your money disappears because you are going to the mall every time you get paid, try to think of something else you can do to distract yourself. Or, if you really like shopping, then tell yourself you are going to leave your credit cards at home and only take an amount of cash equal to what you expect to spend. If you normally spend more than you expect to spend, THAT is when you are in trouble!

• Consider using automatic deduction from your paycheck.

One thing about saving is that it should be something that you are doing without realizing you are doing it. If you are a spendaholic like me, then you spend too much time thinking about the fact that you are saving. Inside your head, you are calculating every extra dollar you have and how much of that extra money you can use to do whatever it is that lies in front of you right then. Overeaters, alcoholics and drug addicts have the same problem. In order to get rid of the problem, they have to find mechanisms to protect themselves from their own weaknesses.

Create a separate bank account designed to hold your savings, and do not get an ATM card for this account. For example, I have relationships with two banks: one designed to hold money I can spend, the other one holding money that I can't touch. I admit that I chose to have an ATM card for the bank account designed to hold my savings, but I don't take the card with me when I am out. I keep it in case of emergency, and I don't have the pin number memorized. That is my way of locking my savings away from myself.

• Consider putting the money into something illiquid.

If you really like to spend, then having the money tucked away into a savings account is not going to work for you. Every time you get paid, you are going to peek at your savings, just so you can watch your money grow. Then, you will slowly start to fantasize about all the things you can buy with this money. Before long, you are dipping into it for a little bit of this and a little bit of that, mainly because you think that the pool of money is large enough that you can't possibly drink it all. Before long, the pool is empty, like the one in your friend's backyard, with all the dirt and leaves at the bottom.

One way to avoid this problem is to put your money someplace where you either can't get to it easily, or it is tough to convert to cash. Again, this is about knowing yourself. Most of the time, when it comes to compulsive spending, we are not willing to go through a great deal of trouble to do it. For example, if you see an outfit in the mall that you are dying to have, you might reach in your pocket for the credit card to make the purchase. But you are NOT going to divest your home business, sell a painting and/or call your broker to sell part of your mutual fund in order to get the dress. That is my point. It is the fact that these investments are ILLIQUID that protects your money from you.


• Create the cash reserve before moving to investing options.

You have to be able to crawl before you walk. People often come up and tell me, "I just got a few thousand dollars from XYZ. What is a good stock to invest in?" The first two questions I ask them are "Do you have any credit card debt? If so, what is the interest rate?" The second question I ask is "Do you have cash available for emergencies?"

If they have credit card debt or no cash reserves available, I tell them that debt and cash access are the most important parts of creating a savings plan. It's sort of like someone giving a bucket of water to a person who risks dying of thirst. Investing that money would be like freezing it for later. Yes, this would make the water last (as opposed to drinking it all today or letting it evaporate), but it would not help that person in the event that tomorrow's water supply is not available. So, the person should probably, say, freeze 90 percent of the water, and keep the other 10 percent in a pitcher in the refrigerator. That gives him access to liquid in the event that he gets thirsty and needs water right away.

Think of your money in the same way. Having wealth is sometimes not as important as having access to cash. You could own a painting worth $10 million, but it doesn't help you buy a cheeseburger if you are hungry right now, and it can't help you get your car fixed tomorrow. The same is true for your cash. Keep liquid reserves, and then move onto higher forms of investing later.

• Pay yourself first.

Your savings is the MOST IMPORTANT BILL YOU HAVE TO PAY. Yes, things like rent, car notes, etc. are important, but your cash reserve is what is going to save you in a bind. When you put together your monthly budget, put your savings at the top and pay everything else after that. You don't want to simply save what's left over.


Dr. Boyce Watkins is the founder of the Your Black World Coalition and the author of the new book 'Black American Money.' To have Dr. Boyce's commentary delivered to your e-mail, please click here.