They say cut your coat according to your cloth. This is very true as far as your personal expenses are concerned. Apart from increasing your income (which is not so easy), saving is one way by which you can easily cut down your financial setbacks in a big way.
By being a little thrifty in your spending, on simple things like food, shelter, clothing and transportation, you can save a lot of money.
Cook at home
Are you fast becoming a fast food nut? Well, did you know that eating out contributes to your mounting expenses more than anything else does? More so it causes health problems. Even if you are a busy professional, you can cook at home. The trick is - take out some time, cook at once and eat it over a period of time. Go ahead and invest in a crock pot (or a slow cooker). It costs anywhere between $20 and $80. You can cook delicious stews, soups and other stuff over the weekend. And what’s more, it’s fun, cheap and healthy too. You can freeze this and use this later. Every time you sit down to eat, all you have to do is to heat it up in the microwave. Now that’s going to be a happy change, for sure.
Dump the car
Save your costs on gas, maintenance and insurance. Travel smooth in carpools and public transportation like bus, light rail or train. It will even save you the mental hassle of being stuck in a messy traffic jam. If your workplace is close, walk down or bike your way to it. You will end up burning those evil calories and keeping your blood pressure in check. What’s more, you will take out more time to have a good look at the world around you.
Save on housing costs
Do your own repairs, changes and overhauling. It is an easy way to cut down your expenses on the maintenance of your house.
Ask your local hardware store for tips to help you, free of cost. Do interior jobs on your own. Get creative and try your hand at painting and home decor. Not only will you save money but also be praised for the good job that you will do.
Cut your coat
Well, clothing is a major area of expenses, more so, if you have a family.
Try to use second hand clothes and learn to do your mending jobs. Use clothes line to dry your clothes rather than a dryer. See the difference.
Get rid of addiction
If you spend $5 daily on cigarettes, you are actually spending $1825 a year. So more than anything, your cigarette is burning a hole in your pocket.
Similarly with spending $10 a week on liquor, you end up with an annual bill of $520.Both put together add up to a whopping $2345! Does that ring a bell? Well, that money could be used to pay back your loans or could simply be saved.
Why Do You Want Financial Freedom?
Almost all of us know that we want financial freedom, but seldom do we know that why do we want it after all? It may seem a little too obvious a question, but nevertheless its true-the fact remains that most of us would be baffled if we are asked to put down why we hanker after financial freedom?
Well, for me, I want financial freedom because it gives me the ability to
-do anything that I love to do
-stop worrying about monetary issues
-get out of the rat race
-spend more time with family
-find time to exercise
-enjoy longer leisure hours
-have a lifestyle of my choice
-go on frequent vacations
-chill out with friends and loved ones
-donate money for social causes
Well, you can make your own list of reasons as to why you want financial freedom, just the way I have done. Your ‘whys’ may not match mine, but that’s only natural.
It’s important to know the ‘whys’ of things. Once you know why you really want to obtain something, it will keep you ticking. You will want to achieve your goals more quickly and more efficiently. I look at my list of reasons whenever I am demotivated and trust me, it really works.
After you get your list of ‘whys’ done, you should set up a personal inventory for yourself. It is a system by which you would know your current position in the course of action that you have decided for yourself.
I am sure it will be great fun doing this exercise. It will let you know whether you are going in the right direction. Even if you realize later that you have gone wrong in some way, you can come back and mend your ways again.
Another thought-provoking exercise would be to make a list of reasons why you think you are not financially free at the moment. This is important because money is an exceptionally powerful force that can easily destroy you if only you allow it to. Learn the art of mastering your money; never let it be the other way round. You can never be debt-free if you cannot do this. So show some brutal honesty – analyze the reasons why you are in debt. And when I say ‘in debt’ I don’t mean the financial crises that are beyond control and inevitable in life, but all those times you allowed money and its power to control you.
Here are some questions to consider:
Do you buy stuff to mask your own insecurities? Are you using money as a drug to comfort yourself? Do you feel you have to compete financially with your friends, coworkers, neighbors, and family members? Are you trying to impress someone? Your parents? Who is telling you that you have to live high on the hog? What is it that compels you to buy that item right now? Why don’t you have enough self-control to buy later or never?
These are serious questions which must be answered before you attempt to control your money with any kind of budget or financial system. Otherwise, it’s like treating cancer with a Band-Aid. You might even consider psychological counseling for your money difficulties.
With the list of reasons, you will form the foundation of your success. Most of us keep busy in pursuing different things, but more often than not we do not know why we are doing it. Once you have your list of reasons ready, you would know what your heart really wants and isn’t that great?
Well, for me, I want financial freedom because it gives me the ability to
-do anything that I love to do
-stop worrying about monetary issues
-get out of the rat race
-spend more time with family
-find time to exercise
-enjoy longer leisure hours
-have a lifestyle of my choice
-go on frequent vacations
-chill out with friends and loved ones
-donate money for social causes
Well, you can make your own list of reasons as to why you want financial freedom, just the way I have done. Your ‘whys’ may not match mine, but that’s only natural.
It’s important to know the ‘whys’ of things. Once you know why you really want to obtain something, it will keep you ticking. You will want to achieve your goals more quickly and more efficiently. I look at my list of reasons whenever I am demotivated and trust me, it really works.
After you get your list of ‘whys’ done, you should set up a personal inventory for yourself. It is a system by which you would know your current position in the course of action that you have decided for yourself.
I am sure it will be great fun doing this exercise. It will let you know whether you are going in the right direction. Even if you realize later that you have gone wrong in some way, you can come back and mend your ways again.
Another thought-provoking exercise would be to make a list of reasons why you think you are not financially free at the moment. This is important because money is an exceptionally powerful force that can easily destroy you if only you allow it to. Learn the art of mastering your money; never let it be the other way round. You can never be debt-free if you cannot do this. So show some brutal honesty – analyze the reasons why you are in debt. And when I say ‘in debt’ I don’t mean the financial crises that are beyond control and inevitable in life, but all those times you allowed money and its power to control you.
Here are some questions to consider:
Do you buy stuff to mask your own insecurities? Are you using money as a drug to comfort yourself? Do you feel you have to compete financially with your friends, coworkers, neighbors, and family members? Are you trying to impress someone? Your parents? Who is telling you that you have to live high on the hog? What is it that compels you to buy that item right now? Why don’t you have enough self-control to buy later or never?
These are serious questions which must be answered before you attempt to control your money with any kind of budget or financial system. Otherwise, it’s like treating cancer with a Band-Aid. You might even consider psychological counseling for your money difficulties.
With the list of reasons, you will form the foundation of your success. Most of us keep busy in pursuing different things, but more often than not we do not know why we are doing it. Once you have your list of reasons ready, you would know what your heart really wants and isn’t that great?
Working Your Way To Financial Freedom
Most of us know that stats show more than 40% workers do not save for retirement at all and more than 30% people will inherit less than $50,000.studies also show that the national rate of savings have fallen to 2% today, from the 10%and above that it was in the 1980’s.
Well, when we know all this, then why are we not saving? Most people retire at some point of time or other, but little do they plan to make life comfortable after. Some of the probable reasons could be -
Social security and pension
Suppose you have worked for Exxon Mobil (NYSE:XOM) or say General Electric (NYSE:GE) or maybe you have served as a teacher or a policeman, then you would end up with a decent pension though it will be lesser than what you earned earlier.
Even if you have worked for 25 years with a company that offers a defined benefit plan, for a salary of $50,000 per annum, you would get a pension of $18750.together with your earnings from social securities(say $75,400 approximately).you would end up with a decent post-retirement income of $34,150.
However the catch here is the number of years you have worked in that company. Say, if you have worked for 15 years, your pension would drop to a meager sum of $11,250 and even after adding your social securities it would be $26,650 a year! Now that will be difficult to live on.
Another fix is that your pension benefit is not subject to inflation. Whatever you got at 65 years of age, is what you will get even when you turn 85.
Most of us ignore the fact that unless we end up with a real high pension, it will be difficult for us to make both ends if we don’t have our own savings.
Whopping inheritances
We all hear that baby boomers are supposed to inherit a huge sum of money, but how far is it true?
Many of the estimates made in the 1990’s have not materialized in the 2000’s. Most of the inherited money is being spent on medical expenses because of the slow death-rates in the country.
Phil Marti, while answering questions on the Rule of Retirement Discussion Panel, had said the following about an inheritance of $300,000 -
“If it happens, it’s found money, but don’t count on it. My parents, who died at 89 and 90, got along pretty well until May 2000. My mother died June 2001 and my father May 2002. In between we spent well over $200,000 on home health care, plus all the other expenses that go along with maintaining a life.”
Tendencies to save later
Always remember, that the earlier you start to save, the more amount of money you save. As far as saving is concerned, time and money are directly proportional to each other. See below how much a person could have saved at each stage of his life, keeping aside $3000 a year (which also happens to be the contribution amount to the IRA).
Age -- Amount saved at 65 years
25 -- $914,031
26 -- $601,623
27 -- $391,932
28 -- $251,184
29 -- $156,713
30 -- $93,303
So now you know that the value of your nest egg can be depreciated by a one-third, for even 5 years of delay. So I hope you have well realized that time is money.
Inability to save
If you have a family or you stay in an expensive area, it is difficult to save money. But with a little thinking and revamping of your expenses, you can definitely cut down certain costs which are not doing any real good to you.
We all have useless expenses and bad investments, like I had my gym membership and cable connection which I did not need that badly anymore. So when my wife was without a job, we decided to do away with both. In the process we saved $120 a month. Now that comes up to $1440 per year.
In 20 years time, if it grows at a yearly rate of 8%,then this $120 can grow up to a whopping sum of $71,275 and more than $100,000 in 25 years. Now, don’t you agree that our gym and cable were too expensive to us?
The idea to work forever
Well, lots of people never want to go without work. It is definitely a commendable idea to be productive all your life. But the ideal situation is to work for personal satisfaction and not only for money. I am sure all of us would agree to that.
Well, when we know all this, then why are we not saving? Most people retire at some point of time or other, but little do they plan to make life comfortable after. Some of the probable reasons could be -
Social security and pension
Suppose you have worked for Exxon Mobil (NYSE:XOM) or say General Electric (NYSE:GE) or maybe you have served as a teacher or a policeman, then you would end up with a decent pension though it will be lesser than what you earned earlier.
Even if you have worked for 25 years with a company that offers a defined benefit plan, for a salary of $50,000 per annum, you would get a pension of $18750.together with your earnings from social securities(say $75,400 approximately).you would end up with a decent post-retirement income of $34,150.
However the catch here is the number of years you have worked in that company. Say, if you have worked for 15 years, your pension would drop to a meager sum of $11,250 and even after adding your social securities it would be $26,650 a year! Now that will be difficult to live on.
Another fix is that your pension benefit is not subject to inflation. Whatever you got at 65 years of age, is what you will get even when you turn 85.
Most of us ignore the fact that unless we end up with a real high pension, it will be difficult for us to make both ends if we don’t have our own savings.
Whopping inheritances
We all hear that baby boomers are supposed to inherit a huge sum of money, but how far is it true?
Many of the estimates made in the 1990’s have not materialized in the 2000’s. Most of the inherited money is being spent on medical expenses because of the slow death-rates in the country.
Phil Marti, while answering questions on the Rule of Retirement Discussion Panel, had said the following about an inheritance of $300,000 -
“If it happens, it’s found money, but don’t count on it. My parents, who died at 89 and 90, got along pretty well until May 2000. My mother died June 2001 and my father May 2002. In between we spent well over $200,000 on home health care, plus all the other expenses that go along with maintaining a life.”
Tendencies to save later
Always remember, that the earlier you start to save, the more amount of money you save. As far as saving is concerned, time and money are directly proportional to each other. See below how much a person could have saved at each stage of his life, keeping aside $3000 a year (which also happens to be the contribution amount to the IRA).
Age -- Amount saved at 65 years
25 -- $914,031
26 -- $601,623
27 -- $391,932
28 -- $251,184
29 -- $156,713
30 -- $93,303
So now you know that the value of your nest egg can be depreciated by a one-third, for even 5 years of delay. So I hope you have well realized that time is money.
Inability to save
If you have a family or you stay in an expensive area, it is difficult to save money. But with a little thinking and revamping of your expenses, you can definitely cut down certain costs which are not doing any real good to you.
We all have useless expenses and bad investments, like I had my gym membership and cable connection which I did not need that badly anymore. So when my wife was without a job, we decided to do away with both. In the process we saved $120 a month. Now that comes up to $1440 per year.
In 20 years time, if it grows at a yearly rate of 8%,then this $120 can grow up to a whopping sum of $71,275 and more than $100,000 in 25 years. Now, don’t you agree that our gym and cable were too expensive to us?
The idea to work forever
Well, lots of people never want to go without work. It is definitely a commendable idea to be productive all your life. But the ideal situation is to work for personal satisfaction and not only for money. I am sure all of us would agree to that.
Be Safe With Online Banking
Protecting your privacy is a major concern for all people that surf the Internet everyday, but when it comes to being safe with online banking extreme precautions should be applied.
The World Wide Web is plagued with criminal activities such as identity thieving, financial scams, phishing, and many other fraudulent activities.
However, the number of banks and financial institutions with an online presence increases every day, because the Internet is a convenient way to offer their products and services, at the time that communication with consumers is easier.
From this approach, consumers have numerous advantages over traditional or telephone banking, managing their accounts from a central location without leaving their homes or offices.
Considering the banking expansion, new tools for safe banking are being developed every day, but there is no better tool that your educated decision and common sense, being aware of possible any fraud activity.
The way to avoid costly mistakes is by asking, if you get a surprising message from your bank urging you to login and update your information, it is more likely that someone is trying to victimize you. Therefore, a quick phone call to your bank can confirm what you already should know: most financial entities will not ask you to do so.
Before enrolling in online banking, make sure of its legitimacy, confirming that your deposit is federally insured. After this basic security routine, learn more about the service and understand your rights and obligations as a consumer.
If there is something that is not clear, get assistance from financial advisors or banking regulators. The "About us" section is the source to find guidance, otherwise contact the Federal Deposit Insurance Corporation (FDIC) for more information about the institution and its offerings.
Privacy should remain your major concern to avoid identity theft so make sure to keep your personal information private and secure. As of July 2001, all banks are required to provide their customers with a copy of their privacy policy.
Sometimes your information will be shared with affiliates of the bank or other parties for helping to drive products and services that you might need. Even though, it is your right to refuse to get your information shared with others and banks must stick to your wish.
Online transactions are made through a public network: the Internet. It is the responsibility of your bank to provide you with guidance about security practices to keep your credit cards and accounts numbers, Social Security number and other personal information safe.
Data encryption, secure passwords, and personal identification numbers (PINs) are the common methods to keep you safe within your online banking service.
The World Wide Web is plagued with criminal activities such as identity thieving, financial scams, phishing, and many other fraudulent activities.
However, the number of banks and financial institutions with an online presence increases every day, because the Internet is a convenient way to offer their products and services, at the time that communication with consumers is easier.
From this approach, consumers have numerous advantages over traditional or telephone banking, managing their accounts from a central location without leaving their homes or offices.
Considering the banking expansion, new tools for safe banking are being developed every day, but there is no better tool that your educated decision and common sense, being aware of possible any fraud activity.
The way to avoid costly mistakes is by asking, if you get a surprising message from your bank urging you to login and update your information, it is more likely that someone is trying to victimize you. Therefore, a quick phone call to your bank can confirm what you already should know: most financial entities will not ask you to do so.
Before enrolling in online banking, make sure of its legitimacy, confirming that your deposit is federally insured. After this basic security routine, learn more about the service and understand your rights and obligations as a consumer.
If there is something that is not clear, get assistance from financial advisors or banking regulators. The "About us" section is the source to find guidance, otherwise contact the Federal Deposit Insurance Corporation (FDIC) for more information about the institution and its offerings.
Privacy should remain your major concern to avoid identity theft so make sure to keep your personal information private and secure. As of July 2001, all banks are required to provide their customers with a copy of their privacy policy.
Sometimes your information will be shared with affiliates of the bank or other parties for helping to drive products and services that you might need. Even though, it is your right to refuse to get your information shared with others and banks must stick to your wish.
Online transactions are made through a public network: the Internet. It is the responsibility of your bank to provide you with guidance about security practices to keep your credit cards and accounts numbers, Social Security number and other personal information safe.
Data encryption, secure passwords, and personal identification numbers (PINs) are the common methods to keep you safe within your online banking service.
What Would You Do With £100,000?
Have you ever thought of those who have money being wise about money? You would be wrong to think so; managing money is troublesome for both the well to do and those who have none.
We were in a coffee shop catching up on life when my friend asked me what I would do if I had £100, 000. I asked him if he had the said amount and wanted advice on what to do with money, but he would not budge until I answered his question.
After telling him what I would do with the money, he then told me what he would and that a friend of his had such an amount sitting in the bank, doing nothing. He also told me the money had been in the bank for a while and his friend didn’t have a clue what to do.
The rest of the afternoon was spent talking about the various things one could do with a hundred grand. We also lamented at how ridiculous it was to have such a large sum of money and not use it wisely. One of the things we agreed was how wasteful it was to have money sitting in the bank doing nothing -- and especially in a basic saving account.
The irony of it all was that his friend was working for a bank. Not only do you expect someone who worked in a bank to know how to manage money, you would also expect his employers to advice him on the best home for his money.
Our friend was busy working and making money for others, forgetting to make money for himself. If only he knew all he had to do was, think of how to manage and grow his money, then he would not have to work long hours.
As we walked home, we concluded that making and managing money was something to be learnt, and the mere having of money did not mean one was financially astute. We also agreed our money should be working as hard as we are. As we made our separate ways, we shook hands to not wasting money.
We were in a coffee shop catching up on life when my friend asked me what I would do if I had £100, 000. I asked him if he had the said amount and wanted advice on what to do with money, but he would not budge until I answered his question.
After telling him what I would do with the money, he then told me what he would and that a friend of his had such an amount sitting in the bank, doing nothing. He also told me the money had been in the bank for a while and his friend didn’t have a clue what to do.
The rest of the afternoon was spent talking about the various things one could do with a hundred grand. We also lamented at how ridiculous it was to have such a large sum of money and not use it wisely. One of the things we agreed was how wasteful it was to have money sitting in the bank doing nothing -- and especially in a basic saving account.
The irony of it all was that his friend was working for a bank. Not only do you expect someone who worked in a bank to know how to manage money, you would also expect his employers to advice him on the best home for his money.
Our friend was busy working and making money for others, forgetting to make money for himself. If only he knew all he had to do was, think of how to manage and grow his money, then he would not have to work long hours.
As we walked home, we concluded that making and managing money was something to be learnt, and the mere having of money did not mean one was financially astute. We also agreed our money should be working as hard as we are. As we made our separate ways, we shook hands to not wasting money.
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