Monthly Archives: June 2016

Tips to Wisely Save More Money With Less Effort

Intermittent monetary emergencies have demonstrated that putting something aside for what’s to come is as critical as acquiring. With various individuals rendered jobless because of the monetary retreat and not able to meet even their everyday costs, it has turned out to be amazingly obvious that you have to ace the specialty of putting something aside for a blustery day so you can be set up for any projections and spare yourself from any untoward conditions later on.

Cut the Expenses

It is simple logic! Cut down all the unnecessary expenses and soon, you will be saving much more money. A good idea to do this is to prepare a list of items that you need before you set out shopping and then stick to the list! If you are staying at a bigger flat, consider renting a smaller one. Likewise, cut on your telephone bill, entertainment expenses, give up any membership of a club or a gym that you have but not used for ages, keep only one credit card, etc.

Make a Monthly Budget

Inculcate the habit of making a budget every month, listing all your expenses and incomes. During budgeting, ensure that you save at least fifteen percent of all your income. This way, you will know that you have only an X amount of money to spend, as the rest has to be saved for the future.

Pay Cash

If plastic money has made shopping convenient and safe, its biggest drawback is that we do not think twice before buying something which is way beyond our means. To save more money, it is suggested that you make most of your payments through cash. This will ensure that you do not buy something for which you don’t have immediate cash available, thus saving a lot of money for you, which you would have otherwise paid as interest on credit card installments.

Cook at Home

One of the ways to save extra money is to cook and eat food at home. If you ever calculate the amount that you spend on eating out, you will be amazed that collectively it runs in thousands of dollars per month. So one of the tips for saving money and also for a healthier and hygienic diet, start cooking on your own at home!

Shop Intelligently

Another money saving tip is to shop from places where you get discounts and good deals. You can buy grocery in bulk and look out for discounts when you buy clothes. You can even get good deals in thrift stores, yard sales, stock clearance, garage sales, second-hand goods shops, end-of-season sales. Websites such as e-bay offer a cheaper and convenient alternative for buying stuff. Also, stop impulsive shopping; do not buy stuff you want but don’t need.

Save on Electricity

By conserving energy, you are cutting your expenses and at the same time contributing to save the environment from global warming. Make sure you switch off the lights, fans, TV and all other electric appliances when not in use. Buy energy efficient electrical appliances, use devices which operate on solar energy, lower the thermostat in your house by two degrees during winter season, and raise it by two degrees during the summer season.

Use Public Transport

A good idea is to travel by public transport. If the distance to be covered is less, you can even walk down, instead of spending money on filling gas in your vehicle.

Earn More

If you feel that you need to save much more than what you are doing right now, supplement your current income by taking a part-time job. You can even think of making more money by starting your own home based business.

Invest Properly

Investing wisely is very important so that the money does not lie wasted in bank accounts. Cut down on your expenses and increase your avenues of income generation, and invest wisely in real estate and long-term schemes for a safer future.

System to Save Money

The Envelope System, advanced by Dave Ramsey, is a thought on a planning framework that a great many people have been taking after religiously and effectively. Discover how you also can utilize this framework to arrange and spare your cash mindfully.

Make a separate envelope for all the change that you accumulate. Count it after a month or two and you’ll have a decent amount as ready-made savings.

  • Income: The money we get for work we do
  • Expenses: The money we spend on things we need
  • Necessities: Things that we absolutely cannot live without [the bare minimum include food, clothing, shelter (and today, the Internet)]
  • Luxuries: Things we can or cannot afford, but still end up spending on, simply because we have the means – plastic money
  • Debt: What we find ourselves in because we cannot (or do not want to) decipher the difference between necessities and luxuries
  • Financial Crisis: Which happens when our debts continue to mount due to excessive spending on luxuries
    Breakdown (Financial, Emotional and possibly Physical): The result of ever-increasing debt and no means to repay it

These are the probable series of events that you may find yourself in if you’re among the millions who have the question, “Where did all the money go?” on their minds at the end of each month, or use “What are credit cards for!” as a retort when asked why they want to buy that unnecessary scarf a golf club. It may seem very harsh and insensitive to say, but the truth is that most of us avoid facing the reality of the dire straits that our financial lives are in. We want it to seem like we have it all figured out, but the truth is that we’re in denial. We deny that we have a spending problem. We deny that we don’t like to plan our finances. We deny that we buy stuff we don’t really need. We also deny that we need help. All that ends today! Thanks to the Envelope System that’s been brought into the spotlight by Dave Ramsey, you can learn to have your finances control you rather than you letting them flow down the drain (read: swiping that piece of plastic ever so frequently). Here are some simple steps that you need to follow for a frugal, yet fruitful living. You’ll need:

  • Envelopes (number depends on items mentioned in step 1)
  • Pen or pencil
  • Notepad

Step 1

Fix a Budget
The word ‘budget’ has come to have such negative connotations that people simply don’t want to use it anymore. A budget is “the money that is available to a person … and a plan of how it will be spent over a period of time”, as per the Oxford Dictionary. It’s a seemingly harmless, yet an extremely loaded word. The first step towards managing your spending is having a plan of how much money you have and how you need to spend it, and not how you intend to spend it. How to do this? First, in the notepad, make a note of the amount of money that is due to come in. Using this as base, make a list of all the assured expenses you will incur until the next inflow of money. For instance, suppose your income is USD XYZ. From this XYZ, subtract fixed expenses, like mortgage/rent, food, cable, fees, phone, and other bills, etc. If these figures are not fixed, take an upper limit and write it against the item.

Step 2

Make Envelopes for Each (Fixed) Item
Once you have the breakdown of the expenses, you have to physically divide the money into different sections. Then select an envelope for each item. Write the name of the item at the back along with the amount of money that you’re putting in it. Put only the allotted amount into the envelope. Repeat this for all the items on the list and keep these aside.

Step 3

Make One for Emergencies and Contingencies
Your son hurts himself and you have to rush him to the ER; your car breaks down and you need to have it towed―you can never predict when such things will happen. Hence, it is important to keep some money aside for them. So, mark another envelope for emergencies, and put the assigned amount into it.

Step 4

Keep Some Money for Fun Aside
After deducting the amount assigned to emergencies, whatever money remains, you can make a call on how much you want to keep aside for yourself, just for fun. You may find your dream purse or the perfect tool kit on sale! Don’t let a money management plan get in your way. Keep an amount aside for such opportunities right at the start, so you know that you can afford it, thus, avoiding the guilt that accompanies impulse shopping. What if the amount assigned is insufficient for this dream purchase? Simple, don’t buy it!

Step 5

Don’t Overspend
The success of the Envelope System is solely in your hands. The key to making it work is resisting the temptation to overspend. The whole point of assigning an amount to every single thing that you could possibly spend on is to make sure that you don’t overshoot that amount. So, once an envelope is empty, you know that you cannot afford to spend more money on that particular item. If the money’s gone, it’s gone. Do NOT steal from another envelope, not even the emergencies and contingencies one (unless the situation you’re in fits your description of an emergency or contingency).

Step 6

Make Way for Savings
If you do abide by all the steps given above, chances that you’ll have some money left to spare are more than high. How? Well, let’s see:

✔ When you make a budget, you’re making a promise to yourself that you won’t overspend on an item.
✔ As a result, you begin to pay more attention to whether you actually need the item.
✔ If yes, the next thing you look for is whether there are inexpensive alternatives available.
✔ If yes, then great! If no, then you’ll begin to look for items that you’ve included in the list, but the expense of which can be postponed for the time being.
✔ Thus, you have already allotted that amount to the item for the next cycle (so don’t forget to add this amount there).

When you do this for everything, you’ll realize how much extra money you spend on items that you think you need, but don’t.
Be honest with yourself when using this system and you’ll see that its effectiveness lies in its freakish simplicity. You allot money to an item, you use it on that item, you keep some aside for a rainy day, and have fun with some. That’s all there is to it. Don’t be discouraged if this stringent method doesn’t work its magic instantly. Give it a couple of months, and you’ll surely reap its reward!

Tips to Start a Social Savings Club

Beginning a social reserve funds club won’t just help you to spare routinely yet will likewise help in showing signs of improvement profit for your venture. Be that as it may, you ought to be totally mindful of the strategy before starting such a club. Here is inside and out data about beginning a social funds club.

In today’s fast-paced life when people are just too busy to socialize with others, initiatives like a social savings club not only help in interacting with others but also help in saving a considerable amount of money. These clubs are formed by people to collectively save money and utilize it for a personal cause. Many people save money through such clubs for an entire year to spend during Christmas. Some even save money to reap its benefits in their post retirement days, or for the education and marriages of their children, where a lot of expenses will be incurred.

Like other clubs, a social savings club also gives its members a reason to get together once a week or a month at a café or a restaurant for socializing. The money collected during these meetings is kept in a high-yielding bank account, so that it provides impressive returns after a certain period of time.

Starting a social savings club is easy provided you adhere to the formalities of the bank and IRS. There have been cases where people have been duped by fraudulent members. Hence, it is essential that you start the club by involving people who are already known to you. Here is the process of starting your own social savings club.

Choosing Members

Fix the number of members for the club. For example, if you choose a 10-member team, it will be easier to manage. However, if you start with a 50-member team, it may get difficult for you to handle so many members. Search for people who have common and realistic goals for saving, like those who are planning to save for their retirement. This will also help them to bond easily. As mentioned earlier, select people whose background is known to you. As a lot of money is involved, it is always better to give entry to trusted members only.

Deciding the Amount

After choosing the members, you must review the financial goals of each member. Determine how much each member can contribute and prepare a schedule for payouts. While deciding the amount, ascertain the financial capability of each person. Make sure the objective of saving a certain amount at the end of the year is clear to the members. For example, if you want to save $1200 by Christmas, you will have to chip in $100 every month. It is easier if all the members contribute a specified monthly amount to the club, as varying amounts can be confusing. Maintain a record of all the contributions made. You can take the help of audio-visual aids to describe where the group aims to be in the next few years. This will motivate the members to save their personal income.

Members Agreement

Once you decide the members, you will have to draft a membership agreement and take the signature of all members. It is better to get the membership agreement prepared by an attorney. The agreement should give all the details of the members, their name, address, contribution, etc. It should also clearly state the terms and conditions, and the payout date. The agreement should also speak about clauses, like how to send the money if a member is not present for the meeting, an exit strategy if a person leaves the social savings club, etc. It should also state when a member will receive a refund and what will be the amount. This decision can also be subjected to a vote by members. It is better to get the document notarized as it will be an acknowledgment that the members will contribute towards savings. It can also be treated as a promissory note.

Forming a Committee

Select members from your group to form a committee. As many people are involved, there are chances of conflict. So, it is better to have a voting system in place, especially for determining the post of the president, treasurer, secretary, etc. who look after the proceedings of the social club. These people can also take help from other members if required. For example, a member who is working in a bank can definitely help out the treasurer with the formalities of opening a bank account and depositing the amount. However, ensure that the selected committee is honest and trustworthy.

Arranging Meetings

You will have to arrange for meetings and decide the venue for the same. It can either be same throughout the year or can change according to the convenience of the members. It is better to host the get-together at someone’s place, as meeting at a café or restaurant will incur additional cost for the members. You may ask the members to host the meeting turn-by-turn, so that the burden of the expenses do not fall on a single person. You can also host get-togethers at various restaurants if you are ready to spend for it.

Depositing the Money in Bank

You need to deposit the money in a FDIC-insured bank by opening a high-yield account. It can be either a personal account or a business account. You can set up one account or multiple ones depending on the money you are aiming to save. The committee members should have access to it for depositing money and monitoring the transactions. You will also have to be aware about the tax applicable on the interest of the savings, which you will have to pay. It is best to take the help of a tax consultant to calculate the exact amount.

Your group can also act as a microlender by offering personal loans with attractive interest rates. However, verify the background of people you lend money to and maintain the appropriate records. Also, avoid investing your group’s hard-earned money in stocks, as it can be a huge gamble. Consult an investment expert to understand how you can redeem maximum benefits from your social savings club.

Easily Break Your Habit of Spending Unnecessarily

A considerable measure of us make certain buys that we can truly manage without. When we burn through cash on superfluous things, our budgetary arranging goes for a hurl. Over a timeframe, it can even turn into a propensity which might be difficult to dispose of. Gratefully, it is never past the point where it is possible to eliminate superfluous ways of managing money, and this post will concentrate on a few tips to accomplish that.

Most of us want to have adequate savings for our rainy day fund. To achieve this goal, certain things need to be ensured. First and foremost, we need to earn well, so that even after paying the bills, we are left with a substantial amount, which can be diverted to the savings fund. Secondly, we need to ensure that we are spending to take care of our needs, and resisting the temptation of our ‘wants’.

If we do a bit of retrospection, we will find out that we make a lot of impulsive purchases. When we go shopping, armed with a credit card, there is an increased likelihood that we end up buying things on a whim. Eventually, our whims and impulses become a habit, which like other bad habits, take a toll on our financial health. Thus, it becomes very important that we get ourselves out of the mire of unnecessary spending.

Also, it is important to note that unnecessary spending comes in many forms, only one of which is shopping. Services – like a gym membership that goes unused, or an extra DirecTV connection, are also forms of unnecessary spending.

In the following paragraphs, we give you a few options and suggestions which can help you to save, and fatten up that rainy day fund.

Plan a Budget and Stick to It

If you are living paycheck-to-paycheck, it is important to plan your money allocation systematically. Before you receive your salary, make a detailed entry of the expenses that are due, such as your monthly EMIs, electricity and phone bills, groceries – basically everything that you cannot do without. Once you have a fair idea of how much you are going to be left with, you can plan how much money you can save or invest in a month. Allocate adequate money for recreational activities, but once you have fixed a figure, do everything in your capacity to ensure that you stick to your plan. This way, you will have a fair idea of your finances, and hopefully, it will dissuade you from spending unnecessarily.

Prepare a List Before You Shop

Making a list before entering a shopping mall or a grocery store is a good way of ensuring that you don’t spend on unnecessary items. Carry a pen along with you, check the items you have put into the cart, and move on to get the next thing on the list. There are numerous distractions at the mall, thanks to the careful structuring and placement of commodities, but if you act like a blinkered horse, and head only to those sections which house items on your list, your job is half done. Another tip that can be helpful while shopping for groceries is to avoid using carts when you are in to get a just few things. Store owners think that people will shop more if they see that their cart can still hold more items, which is the prime reason for shopping carts getting bigger.

Take the Help of a Frugal Friend While You Shop

If you have a friend who knows that you have poor spending habits, it will be a nice idea to get him to accompany you when you are out shopping. He can assume the role of a critic by restricting you when your impulses start to get the better of you.

Use Cash Instead of Credit Cards

Well, I guess everyone has experienced, or knows, how quickly debt accumulates on a credit card. When we buy on credit, we are essentially spending beyond our means. As we are not dealing in hard currency, the realization that we might have indulged in unnecessary spending only hits us when we receive those huge monthly statements. If you find it extremely difficult to rein yourself when you have a credit card in your wallet, try ‘forgetting’ it at home and step out with cash to buy the required things.

Never Shop to Keep Up With Someone

A lot of times, we shop just to ‘Keep up with the Joneses’. Peer pressure, or a desire to fit into a group, can blind us into spending unnecessarily. Letting our emotions take control of our spending habits is the first step on the way to financial doom. I have seen a couple of friends engage in one-upmanship, and at the end of it, both were in serious debt. We should try to understand that our friends and competitors may have a passive source of income, or they might be free of financial liabilities, and hence they have all those extra dollars to splurge. Spending solely to prove a point to them may provide a brief moment of satisfaction, but in the long term, it definitely bogs us down with debts and no savings. To get off this habit, we should do a bit of introspection and engage ourselves in other constructive pursuits. Resisting temptation is very important in controlling frivolous and wild spending habits.

Get Rid of Bad Habits

Unnecessary spending habits has also got a lot to do with bad habits. Yes, smoking and alcoholism are bad enough for our health, and spending our hard-earned dollars on them only compounds the problem. If we really keep a record of the money splurged on cigarettes and alcohol, we will realize that it could have been used for something more worthy. If we really want to get rid of our habit of spending unnecessarily, it is extremely important that we quit, or limit, smoking and drinking. Going cold turkey can have issues of its own, so it is advised that you gradually reduce your dependence on intoxicants. This will not only help in saving you some money, but also diminish the risk of running huge bills at the hospital in the later stages of our life.

Small Things That Can Make a Difference

  • Brown bag your lunches and cook dinner at home. Not only will you be saving a good amount of money, but this will also reduce the instances of eating junk food.
  • Check what you are paying for your phone contract, data plan, and cable. Analyze whether you really need all the services that you are paying for. By expending a few extra, unused services, you will be able to save some money.
  • Given the ever-increasing costs of gasoline, a significant portion of our monthly expense is spent on transportation. Try to minimize the use of your personal vehicle and give public transport a try. If you have colleagues in your locality, see if carpooling can be an option.
  • Many people like to pick up a cup from the drive-through at Starbucks, but you can save considerable money if you brew your own coffee at home.

Many people may argue that people who spend frugally never know what it is to live life to the fullest, but there is a lot of difference between spending wisely and being a miser. The important thing to remember is that some people spend for just the heck of it, and spending money on unnecessary things becomes a way of life for them. This is where it becomes a bad habit, which can have serious repercussions in the future. Everybody loves to indulge in shopping, or going on a spending spree once in a while, and it is absolutely fine to do so, but overdoing it creates financial issues and bad debts, which I am sure, nobody wants in life.