I just realised that one big thing that is keeping us from saving is the fact that when we save, we normally cannot get what we want immediately. For example, I want that HD TV. I can buy it but that means wiping out all my savings PLUS using my credit card. I can get it and feel nice and rich but what does that leave me with in terms of savings? Zilch. You get the picture?

If this is the case, then maybe we need to rethink how we go about saving. Perhaps, with a little shift in mindset, we can save without feeling that we are depriving ourselves of what we deserve!

The first step, I believe, is to focus less on being materialistic. Be realistic about what you can afford. Going to the mall, browsing online stores, flipping through pages of shopping catalogs – all these are well and good. The problem starts when we start wanting everything that we see. We think that we need such a thing when we know very well that it is beyond our financial means. We think that oh, the credit card can cover it – that’s what credit cards are for. Really, now…Perhaps, if we focus more on other things that promote a sense of well-being without draining our finances, we would be able to start saving. What do you think?

Another step towards being able to save without feeling deprived is to change your thinking from short term gain to long term gain. This is very hard, trust me. For some people, immediate satisfaction is what matters most. Seize the day is how their minds operate. Now I am not saying that you should NEVER live for the moment – it has it benefits and thrills. However, the next time that you find yourself debating whether to make that purchase or not, think about the future. Think about a smaller credit card bill if you do not make that purchase. Think about lower charges on interest. Think about being able to put aside that money for the vacation that you have been wanting to go on. Better yet, think about being able to set aside that money for an investment plan that could allow you to retire the way that you want to.

To help you better make that shift in your mindset, take a look around your house – take a deeper look at your life. With everything that you have bought, everything that you have spent your money on, are you happy? Are you satisfied or do you find yourself wanting more? If the latter applies, then you should know that the chances are that you would keep on wanting something more – it will never end unless you put a stop to it. Perhaps this can help you start putting your money into purchases or activities that will provide a more lasting sense of satisfaction.

There are other ways by which you can start saving without feeling bad – let’s look at them in the next post.

When talking about savings, I somehow cannot get a particular image out of my mind. I don’t know if you’ve heard this story but the image that comes to mind is of an old man digging a hole in his backyard and placing a large coffee can in it. The coffee can contains money – his life savings. In fact, he has more than one coffee can. He has lots of them and all of them are full of money. His backyard is a veritable treasure trove!

My parents taught me the value of saving early on. As a child, I had my own junior savings account in our local bank. They dissuaded me from spending all of my allowance and they dissuaded me from merely hoarding it at home – much like the old man and his coffee cans. The rationale was that why keep the money stagnant when it can be just as safe in the bank and earn interest over time.

It made sense and it still does, actually. However, with the changing economic landscape, is it still safe to keep money in the bank? More so, is it profitable to keep money in the bank?

I think that the first question is easier to answer. More or less, yes, our savings are safe in the bank. This is especially true if we keep our money in a stable bank. Savings are also insured to a certain degree, so if anything happens to the bank, we can still have our money back – or at least part of it.

The second question, however, raises a whole lot of other questions. One thing is for certain, though. Interest rates are not that significant. On the other hand, the inflation rate is definitely going up. What are the implications of these facts?

Let us take a look at specific figures. Let us say that your bank’s interest rate for savings account is 6.4% per year – gross. The inflation rate, however, is about 4% per year. After taxes, your net returns would be 3.84%. This is obviously lower than the inflation rate. This simply means that your money is not worth what it was when you first put it in. In short, inflation eats away at the value of your money – if you keep it in the bank.

With these figures in mind, do you think that your money is safe in your savings account (of course taking into account both aspects – in terms of retrieving your money AND keeping its value intact)? I think not.

But what are you supposed to do with your money then? Should you just keep everything in coffee cans like that old man and bury them in your yard? Perhaps not – inflation will still catch up on your money and leave you with less than what you started with.

There are alternatives, however. So there is no need to despair. Perhaps in the next posts, we can look at alternatives to savings account as a means of saving your money and making it keep up with the inflation rate.

With the price of petrol going nowhere but up these days, it is but natural for us to find ways to cut our costs. If you are spending more on commuting than what you want to, then you might want to check out these tips from CNN Money.

1. Calculate Alternatives
Do you know just how much money you’re using by commuting back and forth to work?
The typical commuter pays over $200 per month just to get back and forth to work. That’s over $2,400 per year, or put differently, the same as a $3,500 raise in your salary.
So, think about how much you would save by taking mass transit instead.
Check out this calculator from commuterchoice.com that let’s you see what the cost benefit could be if you hopped on the train or the bus.

2. Improve your mileage
Getting the most out of your gas tank is a priority.
Here’s how to do it:
First, simply maintain your car. One of the most important things you can do it to make sure your tires are inflated properly.
According to tests done by Edmunds.com, driving with tires underinflated by 25% caused a loss of fuel economy on an average of 3.75%.
If you have a roof rack that you’re not using, take it down. It can cause a fuel loss of 1%.
And if you have a lot of junk in the trunk, make sure you get rid of it. That heavy load can really add to your gas bill.
If both spouses drive to work in separate cars, use the more fuel-efficient one for the longest commute.

3. Look to your employer
The federal and most state governments offer big tax breaks for commuters.
If your employer offers a flexible spending plan for transportation, take advantage of it. This program lets you put pretax money away for your transit passes or parking expenses.
And the money you contribute to this fund lowers your taxable income, so you’ll be shielding the cash from Uncle Sam.
Make sure you ask your employer if this perk is offered.

4. Find a buddy
Driving to work may be a drag, but you can drastically cut down on your mileage by sharing the ride with a colleague or a buddy.
Sign up for the free service http://www.erideshare.com/ to find fellow travelers who are looking to connect and share rides.
You can also check out commuterchoice.com or your state’s department of transportation for more information.

5. Call your insurance company
If you do cut your commute, let your auto insurer know.
You’ll generally get a low-mileage discount if you drive fewer than 40 miles per day.
You may also be able to cut down on your mileage by pitching the idea of telecommuting one or two days a week to your boss. We’ll have more on that next week.

Obviously, the calculations are for the United States but then again, the same principles apply to the United Kingdom or anywhere in the world for that matter. Why not consider some of these tips and see just how much you can save?

It’s April 22, the designated day wherein the whole world celebrates Earth Day. We have all seen how our ways of living have contributed to the detriment of the environment. And though it may not be too late to do something about it, the fact is that the damage that nature has sustained is quite considerable already. We may not be able to participate in huge events as other people with the means to do so (read: Al Gore, Bono, etc.) but I am sure that in our own little way, we can contribute – and save while we are at it. Here are a few ways to shave a little on our expenses and help the Earth as well.

Go with CFLs
Compact fluorescent light bulbs is what CFLs stands for. These are light bulbs which are more efficient than the standard incandescent light bulbs. They last longer and they consume much less energy than incandescent bulbs as well. CFLs may cost you a bit more at the outset as they may be around ₤1 more than the normal light bulbs. However, as soon as you start using CFLs, you will see your electrical bill go down. More so, they last longer and do not have to replaced as often, making for more savings down the road. Both the lifespan and the energy consumption of CFLs contribute to the environment as well.

Buy more reusables than disposables
Take a look around your house and check just how many disposable things you have. You probably buy rolls of paper towels. Why not substitute the use of paper towels with a sponge instead? For activities wherein you can use a sponge, use it, instead of getting sheets of paper towels. For the former, you can reuse it for many times. With the latter, a couple of wipes and it is done. You save on buying more paper towels and help lessen consumption as well. This is just one example of using something reusable instead of something disposable. I am sure that you can find other things around the house.

Lessen the use of your car
Some people tend to depend on their car too much. I need something from the grocery store a block away – I’ll drive. A couple of hours later, oh, I need something else from the same store – I’ll drive. Another time, I need to visit a friend who lives a couple of blocks away – I’ll drive. The default is to always use the car. Why not plan your visits to the store so that you only have to do it once a week? Why not walk to destinations that you can reach on foot? Why not organise a car pool that would take a group of people where they need to be? Less fuel consumption means more savings for the pocket and even more importantly, less emissions that will harm the environment.

There are so many other ways by which you can save and help out the environment as well. Why not share some of yours with the rest of us?

I am sure that we all would like to think that we are making the most out of our money. Why would we like to think otherwise? However, if you sit down and really think about it, you just might realise that you are not really making the most out of what you have. Take a bit of time to ponder on your finances. Do you receive your pay cheque on a regular basis and yet almost always end up being short on spending money towards the end of the month? If this has happened to you more than once, then you might not really be making the most out of your earnings. Here are some questions to ask yourself and help you analyse your money patterns.

Where do you keep majority of your money?
If your answer is the bank, then you are definitely NOT making the most out of your money. It is true that you are keeping your money quite safe in the bank. After all, money in the bank (especially if you do not really touch it) is out of convenient reach. Money in the bank also earns some interest – but barely. With the inflation rate these days, the interest that your money is earning will not be enough to match the inflation rate. In other words, your money could be earning more in other ways, such as investing.

This is another topic altogether and can be material for another post. But just to give you an idea, if you invest your money wisely, you could be doubling it within a year or two. Compare this to money in the bank, which will definitely NOT double even in 5 years.

What do you use your credit card for? More so, how do you pay it off?
We have to face it – the credit card is a necessity these days. There are some purchases which are more conveniently paid for by card. The problem lies in the fact that some people become comfortable in making large purchases and merely paying the minimum each month. What happens is that they end up with huge revolving balances and merely keep paying the interest off. In short, they are in perpetual debt.

Quite obviously, people who do this do not really make the most out of their money. Instead of being able to save or invest their money, it goes into paying the interest of their credit card bill. What a waste, no?

Are you keeping track of your expenses?
Or do you simply spend and not think about it? Do you find yourself visiting the cash machine more than 3 times a week? Do you find it easy to just brandish your credit card and swipe it? If so, then you may not be keeping track of your expenses. This usually results in you overspending. Nothing more to be said.

If I were you, I’d take some time to answer these questions and see which areas I could work on.

If you are anything like me, I don’t really worry about worst case scenarios when it comes to holidays and everything related to it. It’s not that I don’t care – it’s just I don’t think about it too much. Yet the truth is, we have to make some plans in case something goes wrong. After all, what would you do if you purchase a plane ticket and suddenly the company goes under? Would you get the money back or would you just give it up for lost? I saw a good article over at This Is Money detailing protection for your holidays. Let me share with you some of more relevant questions I found in that article.

Are there any protection schemes for UK travelers?
The article presents two options:

The main two are the Association of British Travel Agents (ABTA) and Air Travel Organisers’ Licensing (Atol).
Any operator selling holidays with flights must be a member of Atol - which is run by the Civil Aviation Authority. Membership of Abta is not compulsory, but 90% of UK travel agents are members.

So how does this affect us? Based on the information the article presents:

Both have bonding schemes. Atol’s bond covers all flights and holidays booked through a member firm, whether that is a tour operator or travel agent. Abta covers the rest. Both protect you if the travel company collapses.

That’s assuring to read – to be honest, I didn’t really know about this protection. So in any case, if something happens and you book with a member firm, you are covered. So I suggest, the next time you plan your holiday, check to see if the booking company you are dealing with is associated with both Atol and ABTA. That way, if something indeed happens, you will be covered and not lose your hard earned vacation money.

What if you book from the airline directly?
Unfortunately, you will not be covered by either Atol or ABTA. Some travel insurance policies cover such events but not all of them do. Your best bet would be to check if your travel insurance policy will cover such events.

Do you need travel insurance?
The answer is a most definite yes! Why? The article says:

While the conventions and rules mentioned above might help, they will not be sufficient if anything awful happens.

A typical travel insurance policy will pay out about £3,000 for cancellation, £1,500 if your baggage is lost or damaged, and will cover up to £10m in medical emergencies costs.

Possessions and medical cover are probably the most important items of a travel insurance policy. No bond will pay out if your camera is stolen - but your travel insurer should.

However, check the limit on single items - often it is set at around £200 per item.

Again, you probably won’t experience something really “awful” but you never know what just might happen! If you want to be safe and sure, and you travel quite often, then I suggest that you look into a separate travel insurance package.

We have to face it – budgeting is not an easy thing to implement. This is already a difficult and sensitive topic for singles, how much more for families? It should be a bit easier if you and your partner have the same spending habits. But how about if you are as different as the sun and the moon? This is only one complication that is added when it comes to budgeting for the family. If you are facing some difficulties with your family budget, here are some tips to help you out.

Leave the spouse at home.
That is, if he or she has looser spending habits than you do. My partner and I have this problem actually. I am the more practical person in the relationship. A simple thing as going to the supermarket can become a complicated thing if we go together. Going together, we might spend double than what I would have spent if I went alone. If you are in this situation, then you might want to go and do the shopping alone from time to time. It will drastically cut down your costs.

When you go shopping together, make sure you have a list with you.
And make sure you stick to it. Of course, you cannot always leave your spouse at home when you go shopping. It could even be one of your bonding moments. Just make sure that you have a prior agreement on what you can afford to purchase and that you both stick to your list.

Leave your credit card at home.
This is one of the most effective budgeting tricks I know. If you have a list, you know what you are going to buy and you can estimate how much you will be needing for the market. If you have a credit card with you, it will be so much easier to go over the budget – you can always fall back on the card if you end up putting more stuff in your trolley. However, if you leave the credit card at home, you will have no choice but to buy only what you can afford with the cash that you have on hand. It is somewhat like brute force, I should say.

Consider shopping at a market rather than a supermarket.
Supermarkets are convenient - there is no doubt about that. However, the products at the supermarket tend to be a bit more expensive than the products at the local market. This is particularly true for fresh produce. So if you have a market near your home, why not consider going there instead of the supermarket? The little that you save on each trip can accumulate to make for more considerable savings.

Do it together.
I mean the budgeting. Though you may be tempted to do it by yourself – if you are the more money-conscious person – you should really involve your spouse. That will mean that the decision was made by you both, making it easier to follow for the both of you.

We all have our own excuses for not saving as much as we should. Maybe our excuses are for totally not saving at the present. If you remember, my last post was about saving NOW. Here are some of the worst excuses that I have heard about putting off saving for a future date.

I don’t have enough money for my expenses, how can I save?
It may have a ring of truth to it – especially if an individual does not really earn that much. Then again, how come this person can afford to go on a vacation? How come he can go out a couple of nights a week with friends and colleagues? How about the “occasional” eating out at a restaurant? Or the new gadget that he just bought a week or so ago?

The truth is that no matter how much one is earning, he can save a certain amount if he truly wants to. Saving is not so much about the total amount you earn as the percentage of what you earn. You do not have to save ALL your earnings. You just need to stash away any amount that you can in order to plan for your future. So, instead of spending too much on the unnecessary things, why not try to set aside 5 or 10 per cent of your wages each time you get paid? Do this before you spend anything so that you can be sure that you have something saved up.

I’ll wait for a promotion and a raise – then, I’ll start saving.
You’ve seen this happen a lot of times – a person thinks to himself or says to others: As soon as I get this promotion or raise, my finances will be much better off and I will have enough extra cash to start saving. The intention is there but when the raise or promotion actually comes, the person suffers from lifestyle inflation. He starts thinking that he has extra money and starts spending that extra sum. He forgets about saving and instead thinks that he still does not have enough money to save! The cycle then begins once again as the person thinks to himself – I’ll wait for the next promotion to start saving. If you depend on such thoughts, then the chances are that you will be slaving away for the rest of your life without having saved a penny. Now who in this earth would want that?

I don’t need to save – I live for the moment.
Alright, that sounds like a good principle to live by – live for the moment. Then again, what do you do when you can’t work anymore? What do you do when you have no source of income and you have nothing saved up? What if some emergency comes up and you do not have any cash to deal with it? Would you still be enjoying your living for a moment principle? I don’t think so!

Whatever excuse you come up with, I don’t think it will justify not saving even just a tiny amount.

It is very easy to say that saving should be a priority in our lives. It is easy to say that we should set aside 10 per cent, or even 5 per cent, of our pay cheques as soon as the money comes in. It is very easy to say that we should have something saved up for the rainy days, or to start planning for the future and start a retirement fund – and so on and so on. I know this for a fact, as I have been in this path for quite some time now. Don’t get me wrong – I do have some cash stashed away in the bank for emergencies. I like to think that I am somehow following sound savings principles. Yet the other day, I realised that even though I have a savings account, it won’t really be big enough to deal with a major emergency – much less sustain me in my old years!

This realisation has brought me to look into other options for my savings and money in general. Though I have my money in the bank – it has been there for years, untouched – it has not really grown. Somehow, somewhere along the way, I have not been adding much to my savings fund. More so, the interest rate of the bank is almost negligible! So what other options are open for me?

I am not one to take much risk when it comes to stocks and investing and all that. Yet I have been thinking, maybe I should try out something that would force me to save and at the same time, help me “grow” my money. So I did research and all that and one thing that kept coming up was investing. So I looked around for different ways to invest and stumbled upon products such as Mutual Funds and the like. I am not going to mention the company that I am dealing with right now but you might want to look at these products if you want to start saving NOW and watch your money grow as well.

So how does it work? Right now, I am looking at two products – one is something like life insurance and retirement fund combined. So I pay premiums every quarter for the next 10 years. When I reach 60, I will get my money back – multiplied by a huge amount. How can this be? Simply because the fund that I am working does not only keep my money for me but invests it. Depending on the performance of the market over the years, my money could multiply exponentially. Of course, there is a certain degree of risk here as the market could crash and I would lose all of my money. The trick is in finding a good company that can help you. I am no expert when it comes to investing, to be honest. I am merely an average working person who is trying to find a way to save something from what I am currently earning and to be able to plan for my future so that I will be self-sufficient when I retire.

I can wait till I am older, I suppose but why should I? The earlier I start saving (for real), the more I can have saved up to enjoy in my later years.

In the last post, I talked about some popular ideas that many people have regarding their credit rating and how they get rejected for loans. Of course, we cannot simply leave things at that and not look at the other side of the coin. So here are some facts about your credit rating. These are the things that matter, things that you should actually look at and be concerned about.

You need some sort of credit history.
Some people think that just because they are not in debt, then they are good to go. Well, if they only use cash and never have to apply for a loan then probably, yes, that is true. However, if you want to get approved for a loan, then you need some sort of credit history. More than you not being in debt, lenders want to see something concrete. A good thing to do would be to have a credit card and use it from time to time and pay it off immediately. This way, you will have something concrete to show the lender and prove that you have a good track record.

Your current bills and balances matter.
Your credit report shows more than your history and your score. It shows what you owe at the time the credit check was run. So for example, if you have 3 credit cards and they are all maxed out plus you have other existing loans, it might not bode well for your chances at a loan. Potential creditors will look at your existing obligations to determine if you will still be able to pay off THEIR loan with what you already owe at the moment. So a good thing to do, before applying for a loan, would be to check your current balances and see if you can lessen them first.

Credit checks and applications matter.
I am sure you have heard of this before – running a lot of credit checks within a relatively short period of time is going to harm your record. Recent credit checks and loan applications are reflected in your credit report. This is usually not taken as a good thing by creditors. The more credit checks and applications you have in the past months, then the suspicions of creditors may be roused. They can either think that you are desperate (which is not a good thing in their eyes) OR that you are part of a fraudulent activity (definitely NOT a good thing).

Missed payments are bad!
Put yourself in the shoes of lenders – if you see that someone who is applying for loan has missed repayments for other loans, then would you trust that person to make ALL the payments for YOUR loan? I think not. That is why missed repayments are really bad news. It is very rare that lenders will overlook several instances of missed payments. The solution? It is very simple really, you just have to make your payments on time – no ifs or buts.