Vera Bonner, Local 1000, CSEA

Local 1000/CSEA

Vera, 32, hasn't thought much about retirement, but she says she hopes it includes owning her own home, driving her own car, and maybe visiting a tropical island and sipping a drink with an umbrella in it.

Vera, a single mother, supports son Taheem, 10, and daughter Jessica, 4, on the $29,000 she earns annually between her salary as a clerical for New York state and informal child support. She has worked for the state for 11 years and lives in Brooklyn near her mother and several siblings who help out with childcare and occasionally provide an emergency loan.

Certainly Vera's budget is tight. But financial planner Karen Altfest of New York City says Vera's youth puts time on her side. With eight years to save for her son's education, 14 years to save for her daughter's, and 30 years to save for her own retirement, a little careful planning can go a long way.

"I'm a strong woman," says Vera, who is determined to "tolerate no less than a high school education" from her children.

Vera's state pension and Social Security benefits should adequately cover her lower living expenses once her kids are grown and Vera has retired, according to Altfest. But to meet her goals of owning her home and helping put her children through college, Vera will have to start saving money now.

How can she do this on such a tight budget? Sometimes even unlikely areas can yield savings. Vera and Altfest agreed upon the following recommendations:

• Save windfalls. Vera is expecting a $700 bonus in April and a large tax refund from the IRS. As tough as it may be with so many competing expenses, she should put that money away and forget about it.
• Don't overpay Uncle Sam. That large refund means that Vera has been overpaying her taxes. While the forced saving is nice, she gives up interest on that money while the IRS has it. She should adjust her withholdings and save the money herself over the course of the year.
• Take advantage of union benefits. Vera's already taken advantage of the union's tuition assistance program for one semester. She should find out what else the union has to offer, including college scholarships for her children.
• Know and use employment benefits. By talking to someone from human resources, Vera can find out what's available through work-life insurance, for example-so she doesn't buy what she doesn't need.
• Consider canceling children's life insurance. As tragic as the death of a child would be, that event wouldn't affect household income. The money Vera now spends for insurance payments might be better invested for the children's education.
• Spend smart. If she cuts small expenses -- by bringing lunch to work instead of buying it, eliminating one cable TV box and cutting out extra movies -- and shops for discounts, Vera could rack up savings of over $350 a month.

If some of these suggestions work for Vera, what should she do with the money? Here are some of Altfest's recommendations:

• Set up an emergency fund. Put some of that extra cash in a money market account, so it's there when an unexpected bill comes.
• Participate in retirement savings plans. It keeps coming back to this: Taking advantage of tax shelters like those offered by 401(k), 403(b) and 457 plans is one of the smartest moves you can make.
• Go back to school. Vera would like to take some college courses -- with help from her union's tuition assistance program -- when her children are a little older.

Vera likes the ideas that she and Altfest came up with for saving money. She says that, until now, she hasn't known what to do with money she did save. Going through this process, she says, has given her direction.