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Posts Tagged ‘saving tips’

Times are difficult for many but they don’t have to be. Parents are the most important teachers their kids will ever have. If you want your kids to grow up to be financially independent, then be a good role model for them.

  • Tell your kids school is important. Although a college degree is no guarantee of financial success, those with a college degree tend to make more money than those without. Graduate and professional degree earners tend to make more than those with a baccalaureate. https://moneyprovidesfreedom.wordpress.com/2010/06/18/the-value-of-an-education/
  • Don’t display wealth. If you look rich (drive an expensive car, own a huge house, wear expensive clothes/jewelry), most likely you are not wealthy. You are probably living in debt. Be a good role model to your children and let them know that having money in the bank is more important than trying to impress their friends. To achieve financial stability, you must save more than you spend – it’s as simple as that.
  • Compounding for decades. When your children are young, open a 529 College Saving Plan for them and set up automatic monthly deposits. I opened 529 College Saving accounts for my kids when they were born. Currently there is about $40,000 in my nine-year olds account and about $34,000 in my seven-year olds account. It’s easy if you start when they are young and make it automatic.
  • Teach your kids how to live on a budget, balance a checkbook and to save. When my kids receive money for their birthday or for Christmas, some of the money can be spent but some must be saved for a “rainy day.” Discuss money and bills with your kids in an age appropriate way.
  • Teaching personal responsibility. Hard work over time is the only way to succeed for most people. Teach that success and wealth are not entitlements. No one is entitled to a “free lunch.” I don’t believe in allowances. Kids shouldn’t get paid for doing nothing. It’s not that way in the real world. If you want your kids to have spending money, tie the money to the amount of age appropriate chores that they do.
  • Don’t bail out your kids too easily. Let them experience the consequences of their actions while they are still living under your roof.

Many parents need to do a better job teaching their children about money. Kids want to learn about money and it is up to parents to successfully nurture their thirst for knowledge. By doing so, you help make sure your kids will have a financially bright future.

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One of the “secrets” of wealth is long-term investments that pay compound interest. When given a choice between a good investment with compound interest and a great investment with simple interest, pick the good investment every time. Over time, the investment that compounds will outperform.

Throughout stock market history, the average yearly returns for periods of 25 years or longer has been around 9-10%. For example, the yearly returns from 1900-2009 was 9.4%. For the last 25 years, the annual return was 11.9%.

So the secret of wealth is to invest when you are very young so you have time on your side. When your child is 16 and starts his first job, match his income and place that amount in an IRA account. Do this every year for five years and your child will be a millionaire by the time he or she retires.

Let’s illustrate with an example. When your child is 16 years old and starts his or her first part-time job, you place $2,000 into an IRA account for your child every year until he or she reaches age 20 for a total investment of $10,000. Even with no further investments, your child would have about $1.1 million by the time he or she retires at age 67 (assumes 10% interest). That $10,000 investment allowed your child to retire a millionaire.

Opening an IRA for your children when they are young is probably one of the easiest and surest ways to make sure your kids will have a great financial future.

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Parents are the most important teachers their kids will ever have. I believe most parents want the best for their children and want them to be financially savvy. However, many parents are actually doing the opposite and are teaching their kids how to be poor. Here’s how:

  • Telling your kids school is not important. Although a college degree is no guarantee of financial success, those with a college degree tend to make more money than those without. Graduate and professional degree earners tend to make more than those with a baccalaureate. https://moneyprovidesfreedom.wordpress.com/2010/06/18/the-value-of-an-education/
  • Encouraging outward displays of wealth. If you look rich (drive an expensive car, own a huge house, wear expensive clothes/jewelry), most likely you are not wealthy. This type of spending creates financial stress. Famous people who made lots and lots of money but filed bankruptcy anyway include Mike Tyson (boxer), Donald Trump (entrepreneur), Anna Nicole Smith (model-actress), Ted Nugent (rock star), Nicolas Cage (actor) and Larry King (talk show host). You need to save more than you spend to become wealthy.
  • Compounding for decades. When your children are young, many parents don’t open a 529 College Savings Plan or Coverdell account. I recommend opening some sort of college  savings plan for your child before he or she is one year old so the account has many years to grow.
  • By not teaching your kids how to live on a budget, balance a checkbook, or to save.
  • By not teaching personal responsibility. Hard work over time is the only way to succeed for most people. Success and wealth are not entitlements.
  • By bailing out your kids too easily. Let them experience the consequences of their actions while they are still living under your roof.

Many parents need to do a better job teaching their children that managing money is what leads to a rich lifestyle instead of the money itself. Kids want to learn about money and it is up to parents to successfully nurture their thirst for knowledge.

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Most people would like more money than they have but are unsure how to achieve greater wealth. There are two basic ways to increase your financial position:

  • Spend less money.
  • Make more money.

Today, I discuss a few ways to spend less money.

  • Think priorities. Think reward. Align your money habits to promote your values. What do you really want in the next 5, 10, or 15 years?
  • Stop paying rent. Rent is a big money waster. Can you cut or decrease your rent payments by moving into a less expensive apartment or taking on roommates? Can you move back in with your parents? If you can afford to buy a home, now may be a great time.
  • Cut your food bills by 50%. Bring bag lunches to work and cut back on restaurant meals. When I was a kid, we only ate out on special occasions like birthdays. Buy unbranded food in bulk.
  • Cut up your credit cards. Get rid of debt by paying cash or by paying your credit card bills in full each month.
  • Reliable and affordable car. If you are thinking of buying a more expensive car, stop! One of the worst things you can do is own a Mercedes or BMW. Cars are a debt and don’t make you money. Expensive cars massage the ego. Use debt to buy appreciating assets. Own a dependable car but not an expensive one.
  • Eliminate costly vices. How much are you spending each month or cigarettes, beer, drinks at restaurants, or illegal drugs?
  • Buy clothes at thrift shops or wait for sales. Never buy retail.

If you have other suggestions, please include them so we can learn from your experiences. I would love to hear your favorite money-saving tips.

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What is more important to achieving financial freedom: having millions of dollars or having much less money but having the tools and knowledge necessary to invest and to spend (save) wisely? Before you answer, consider the following: 

1.  There are many famous people who made tons of money but filed bankruptcy anyway. The list includes Mike Tyson (boxer), Donald Trump (entrepreneur), Anna Nicole Smith (model-actress), Ted Nugent (rock star), Robert Kiyosaki (Rich Dad, Poor Dad author), and Larry King (talk show host) just to name a few.

2.  Approximately 35% of lottery winners of more than one million dollars are in financial difficulty or have filed bankruptcy within 10 years of hitting the jackpot.

So the answer is not how much you make that’s important but how much you save and how wisely you invest those savings. Almost anyone with a steady job and average income can amass a small fortune if they are wise with their money.

Check out my earlier blog Would You pay $1,000,000 for a Burger?  There is a good example of Mr. Bob Works-a-Lot and how much saving $7/day could have earned him if he invested it wisely. Finding an extra $7 a day is pretty easy if you eat out a little less often, keep your car for one extra year, use coupons when grocery shopping, buy clothes when they are on sale, etc. I’m sure you can think of many other examples.

I’ve included a link below that gives some good real life examples of people (extreme savers) that have successfully saved money.

http://financiallyfit.yahoo.com/finance/article-110102-5999-1-secrets-of-extreme-savers?ywaad=ad0035

One last thought: What kind of car does Warren Buffett (world’s 2nd richest billionaire) drive? Answer: A 2001 Lincoln Town car with a license plate that reads “THRIFTY”. 

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When you buy a home, you are required to pay property tax on it. Each state charges a certain percentage based on the value of the land and improvements made on the property. Real estate property tax can average 1 to 2% of the total value of the home. Property owners pay these taxes for as long as they own their homes.

Times are tough and property values have decreased significantly in most areas. If you disagree with the assessed value, you have a right to an assessment review. You will need to document that your home is worth less than the amount the county assessor assigns to your home. You can call your county assessor’s office to get the required forms. Often a website is listed on the back of your tax bill where you can download a copy of the forms you will need. There are filing deadlines so make sure you follow the information on the website.

3 steps to request lowering your property taxes:

 Step 1

Have a real estate appraisal of your property. If your appraisal value is less than the tax assessor’s value, a tax reduction can be justified.

Step 2

From a local real estate broker, get a couple of comparable property sales that are about equal to yours in square footage, property size, and neighborhood location. The comparables should show only recent sales (within the last 3 to 4 months).

Step 3

Complete the forms the tax assessor’s office requires you to send. Mail your real estate appraisal, comparables, and required forms to the tax assessor. Include a letter explaining that you are requesting that the county to re-asses your property and that you have included recent data proving that your property value is lower than what it used to be. Be sure to use registered or receipt acknowledgement so you can track your mail.

If you have done your homework, you have a good chance of successfully lowering your property tax bill. 

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Use these simple saving tips to find extra money to help you through these difficult financial times.

Money:
 1. Eliminate unnecessary fees. Avoid ATMs outside your network. Check with your bank to make sure you have the best type of account for your needs. Buy standard issue checks or rely on online banking.

2. Sign up for automatic bill pay to avoid late fees.

3. Set up your accounts to automatically deposit any extra cash (bonus, tax return, etc) to go into your emergency savings fund, retirement account, or investment account.

4. Monitor your mortgage. If you are not underwater on your mortgage, now may be the best time to refinance to a fixed rate.

5. Shop around the internet for auto and home insurance quotes. You may be able to find a better rate.

6. Shred old financial documents. A study by Utica College’s Center for Identify Management and Information Protection (CIMIP) found that the median dollar loss for identity theft victims was $31,356.

Household:
1. Maintenance. Taking good care of your furnace, roof, and air conditioning can save big bucks.

2. Hold a yard sale or sale unwanted items on Craig’s list or Ebay.

 3. Turn off the lights when you’re not using them.

4. If you have homeowner’s insurance, video everything in your home and keep a copy outside the house in a safe place. This is the best way to offer “proof “of what you own in case of a disaster.

5. Watch less TV. Do you really need that many channels? Going down one tier in your cable service will save you money.

6. Cell phone can be a big saver. Match your plan with your usage. Don’t pay for services you don’t use.

Medicine:
1. Check the end date. Buying outdated or soon-to-expire medication is as good as throwing money away.

2. Generic. Ask your doctor if you can safely substitute a generic brand for your prescription drugs.

3. Shop around. There are price differences between pharmacies. While it’s advisable (for safety’s sake) to establish a relationship with one pharmacist for your prescription drug needs, the pharmacist may be willing to match another pharmacy’s lower price if you ask.

Shopping:
1. Compare costs via the Internet. Online coupons can be found at www.nwsteggz.com

2. Credit cards.  Use your plastic wisely. Research which cards offer perks such as cash back, airline miles, or even money toward college tuition. Better yet, cut up credit cards and pay cash for your purchases

3. Make secondhand a way of life. Shop at yard sales, consignment stores, Craig’s List and Ebay.

4. Shop at discount stores such as T.J. Max and Marshalls.

 5. Be a smart shopper by buying quality when it counts. Consumer tools such as Consumer Reports and Good Housekeeping reports can help you to get the best quality for the least money.

6. Delay gratification. Giving yourself more time to think about a purchase means you’ll make a more informed, less impulsive decision.

Groceries:
1. Grocery shop on a full stomach. Junk food and impulse items look that much more tempting on an empty stomach.

2. Arm yourself with a list and only purchase what is on the list.

3. Plan your meals. Meal planning will help cut random purchases.

4. Cut out the beef. Decreasing your meat consumption or eliminating it altogether can spell big savings.

5. Buy non-groceries at a non-grocery store. Purchasing pharmaceutical items like eye-care products can ratchet up your grocery bill unnecessarily; better deals can be had elsewhere.

6. Leave children at home. Kids tend to toss high-priced junk food into the cart when you’re not looking or pressure you to buy items that you weren’t planning on buying.

Lifestyle:
1. Make saving a family affair. Like dieting, it’s easier to trim the fat from your budget if your loved ones are onboard.

2. Quit your more expensive “bad” habits. Alcohol and cigarettes are expensive.

3. Use unexpected refunds, monetary gifts, etc to pay down debt and pad your emergency savings fund.

4. Enjoy home-cooked meals.

Automotive:
1. Keep your tires properly inflated. You’ll prolong their life and save on gas.

2. Buy regular unleaded gas. Check the octane requirement in your owner’s manual. Most cars were built to run on regular unleaded.

3. Maintain your vehicle. Make it part of your routine to check the car’s fluid levels and tire pressure. Copy the manufacturer’s recommended maintenance schedule and put it in your glove compartment for handy reference.

4. Keep your old car another year or two. Many cars today can last for a long time if properly maintained. 

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