Six Simple Tips to Develop a Savings Plan

Money is part of our everyday life. Money if used wise it becomes a great servant. However, when we allow poor money management to put a yoke on us and our family, we become the servant of money, and money is a terrible master.

One of the lessons we learned from the recent recession is that we cannot trust those in power to protect our investments and savings from the shaky hands of our politicians and the federal reserve. After being indoctrinated with the consumerism philosophy as the cure for all financial ailments learning to save money becomes a challenge for most families. It is important to know how to manage money efficiently to ensure healthy savings. It is the creation of a savings program that can help us sustain the stormy weathers that are ahead of us.

Before you start looking into an investment program, start by developing a savings program. Most of us have heard of saving money "for a rainy day", but many of us never quite get around to developing a personal savings plan. In our economic model where we focus on consumerism it can be difficult to make a savings plan a priority, but the longer we wait, the less opportunity we have to accumulate a healthy financial amount.


Here are six steps you need to develop a workable savings plan:

1. Determine a savings fund adequate to meet emergencies and achieve special goals. Develop your budget from the amount of savings you need to create a cushion your family needs for the rainy days and not from expenses you currently have. 
2. Add up your total income, including any funds you receive in addition to your earnings.
3. Figure out your total fixed expenses such as rent or mortgage, insurance premiums or car payments.
4. Estimate how much you need for day to day living expenses.  
5. Keep your savings funds separate from your operating funds.  This keeps the savings funds separate from the operating funds and you can see your savings account growing every month which provides motivation.
6. Make the savings systematic, for example you can establish a fixed amount every month  of $100 or you can establish a % of your gross salary.

Remember that you will grow richer each month as you pay yourself first. Good money management is more than financial formulas. It is controlled by the current events in our lives, so it needs to be modified as situations in our lives change. Do not be discouraged if initially your savings plan does not meet your goals. You may need to review your plan and identify the areas that need to be corrected, revise your plan and go at it again. This system works regardless of your job position and/or income level.

Five Tips For Financial Freedom

1. Establish and Control Cash Flow
The building blocks of any financial plan are liquidity (or like my wife calls it “fluidity”) and expense management. People who spend more than their income will never achieve financial independence. Your best friend is your family budget, without it you will be spending blindly which will lead you into constant shortfalls and borrowing from your savings or credit cards to cover the “unexpected shortfall”.
2. Manage and Eliminate Debt
As part of the post-recession era, families should have as their primary goal to eliminate debt. As long as our families continue enslaved by debt, we are selling our children's future to the money changers.
3. Establish an Emergency Fund
Families should have at least a three month reserve of cash for emergencies. Once you have established your 3 months of reserve, you should work towards 6 to 9 months of reserves. Emergencies come in different ways from layoffs to natural disasters to illness or death of a family member. Having this emergency fund is critical to sustain those rocky moments. For this type of funds you should avoid Mutual funds, Money market accounts and CDs. Instead go for a savings account or even cash in a safe at home, remember the key is liquidity for this fund.
4. Protect Your Assets
Another aspect we fall short in the United States is inadequate protection for our assets should a wage earner die or become disabled. Tax  planning and using retirement and savings products that offer tax protection are key. Life insurance, retirement and saving vehicles should be carefully evaluated to financial hardship should a disability or death occur.  A family trust can save thousands of dollars in probate in the event of a death as well.
5. Grow Your Wealth
Even in a down market sound investments will still produce returns that grow and protect principle. Take advantage of investment plans from reputable companies with a history of success and expertise. Avoid uncertain and extremely speculative offers. As money grows, the potential for earnings increases exponentially.

Financial freedom does not come free, it requires strong management, planning and foresight. However, with proper planning and using these basic guidelines, your journey will be more enjoyable and will yield a brighter financial future tomorrow.

5 Tips on Saving Money at Home

There might be signs of improvement in the economy. However, with our living expenses increasing, It is important to be savvy about our expenditures.

1. Review your insurance policies - Get those insurance policies out of the storage and review them. If you need help, have your CPA help you determine if there is overlap, unnecessary coverage, or if coverages that are missing or need to be changed due to your current situation.
   
2. Save on books and magazines - Use the library. They have plenty of books, CD’s and DVDs. You can also request that the library buy certain books.
   
3. Watch for crippling fees – We get bombarded by fees are everywhere; bank fees, atm fees, cash checking fees, late fees. Many of them individually are small and many times we do not pay attention to them, but they can add up when analyzed as a whole and over time erode your household finances.
   
4. Be a savvy grocery shopper – grocery monthly bills tend to be one of our largest household expenses after mortgage. Many times we shop based on convenience and shop at the closest store or on impulse and end up buying things we do not need. One way to save on groceries is the use of coupons, you can visit online to a site like coupons.com
   
5. Stop pretending – Many of the financial problems that many American families are going through now has to due with our consumption patterns. Many individuals buy to satisfy an inner need to fit in and be classified as “special”, “vip”, “discriminating”, etc. You need understand that manufacturers don't care about your mental, spiritual, nor financial well being; all they care is to increase sales and profits. Therefore, make your “discriminating” purchases based on your family current financial means and not to show your neighbors and friends what brand of shirt you are wearing when your family is starving and you cannot pay the mortgage.
   

By taking a little time to implement a few changes to your home and daily routine, you will see your household income to exceed household expenses; which is the beginning to true financial wealth!

Self-Discipline the Key To Saving Money and True Wealth

"For the moment all discipline seems painful rather than pleasant, but later it yields the peaceful fruit of righteousness to those who have been trained by it." - Hebrews 12:11

In today's world we have become accustomed to excess. We can never have enough and this behavior has overruled good judgement and common sense. We see how people love to spend, even for things that are entirely unnecessary and useless. Shopping has become our favorite pastime, eating out with friends and families at the most extravagant restaurants has become a lifestyle.

This type of behavior is destructive. With families suffering from the results of our most recent recession, we most take extreme measures to be able to counteract the result of the lack of discipline of the last decades. The best thing we can do for our families is to commit to manage our money, save for the future and to control impulses through self-discipline. One of the best way to save money is to be aware of the fact that one has the power to define the state of his finances specifically through a conscious effort of disciplining the way one spends and controlling one's expenditures.

Self-discipline requires to act in accordance with wisdom instead of feelings. Many times it requires the sacrifice of short-term pleasure and thrills for what matters most in life and long-term rewards. Self-discipline is what drives us to:

* work on a project after the initial thrill has faded away.
* keeps you going to the gym after January 31st.
* wake up early and go to work when all you want to do is lie in bed a little longer.
* say no when tempted to deviate from wisdom.

There is never a better time than today to practice financial self-discipline. There are many ways we can easily be tempted into a debt trap. Self-discipline is the key to reducing one's debts and increasing the possibility of growing one's savings. Otherwise you’ll continue to become ensnared in cycle of endless debt, ruining both your present financial circumstances, as well as your future.

One of the essential keys to successful money management, specifically saving money is to possess proper attitude.  Self-discipline is at the topmost of this proper attitudes list, of course. Understanding the high correlation between self-discipline and saving money, the next logical question is, how do we start acquiring and developing this self-discipline, which often appears so evasive? Well, there are a lot of methods which folks often times take for granted. Here are a few of the easier ones that are almost effortless to follow. Memorize them, and they will grow on you. Attempt to implement these steps gradually in your day-to-day living and certainly they will deliver you tremendous fruits on your path to financial stability.

Here are some helpful money saving tips.

1.  Focus on liquidity - Realize that the most convenient method of building one's wealth is through saving money.  Start by developing a three months of reserve, with a goal to increase it to six and then to nine months. This will create the cushion you need to sustain the next storm.

2. Cut Unnecessary Expenditures - One of the biggest culprits in the erosion of family wealth is the excessive spending on items which are not necessary. Trips to fast food, movies, trips to the beach, trips to the salon, etc. Each of these things need to be cut to a bare minimum.

3. Eliminate Impulse Purchases - One of our worst enemies and destroyer of family stability. Take your time when buying, especially the expensive items.  If you really need it, it would most definitely not slip your mind.  Otherwise, if you go along forgetting all about it, then it isn't really worth the money you have to spend on it at all.

4. Eliminate Credit Card Debt - The biggest culprit of debt slavery. Credit card debts hold the number one slot as the cause for financial drains in our society these days.  Learn to manage and eliminate your credit card debt. It is also important that we teach our children about the proper use of credit cards to prevent them from becoming debt slaves.

Credit Card Debt Statistics (source: Consolidated Credit)

Credit card debt represents a big portion of our total national debt. It is also a major source of financial hardship for many Americans who struggle to pay their bills each month.

    * Total U.S. revolving debt as of May, 2011: $798.3 billion - 98% of that is made up of consumer credit card debt
    * Average credit card debt per household: $6,600 - However, if you count only households that use credit cards: $15,799
    * The average consumer has an average of 3.5 credit cards - This number has been greatly reduced during the economic downturn; prior to 2008, Americans averaged 5.5 credit cards
    * There are 178.6 million credit cardholders in the U.S.
    * The average age to get a first credit card is now 20.8 years
    * Average credit card APR (interest rate) as of November, 2011: 12.36%

No matter how you look at it, saving money is easy to do. It requires discipline, a little bit of imagination, and some creativity which will take you a long way in keeping hold of your hard-earned money, restoring peace to your family and building true wealth.

Why Prepare a Personal Cash Flow Statement?

Controlling your financial affairs requires a budget or cash flow statement. Budgeting and tracking your expenses gives you a strong sense of where your money goes and can help you reach your financial goals, whether they are saving for a down payment on a house, starting a college or university fund for your
children, buying a new car, paying off the credit cards or planning for retirement. A cash flow statement provides you with the following benefits:

1. Know where you stand - A cash flow statement allows you to know exactly how much money you have. The statement shows you how your funds are allocated, how they are working for you, what your plans are for them, and how far along you
are toward reaching your goals.

2. Communication - A budget is a communication tool with other family members to discuss the priorities for where your money should be spent.

3. Control - A budget is the key to enabling you to take charge of your finances. With a budget, you have the tools to decide exactly what is going to happen to your hard-earned money—and when.

4. Identify opportunities - Knowing the exact state of your personal monetary affairs, and being in control of them, allows you to take advantage of opportunities that you might otherwise miss.

5. Extra money - A budget may produce extra money for you to do with as you wish. Hidden fees and lost interest paid to outsiders may be eliminated. Unnecessary expenditures, once identified, can be stripped out. Savings, even small ones, can be invested and made to work for you.

6. Other benefits:

• Indicate your ability to save and invest
• Let you analyze your standard of living
• Indicate if you’re living within or beyond your means
• Highlight any problem areas

Declaring War Against Temptation

The recent worldwide financial crisis has made me reflect about how we manage our financial resources and the reason why we find ourselves in such precarious situations. One of the aspects that most of the people struggle with when they establish a savings/investment plan is temptation. I am not talking about those who saved, created reserves and due to unfortunate situations their savings have been depleted. I am talking about those who have a job, sometimes two or three jobs, they do not seem to have any out of control circumstances, yet they seem to live in total financial chaos. I will say this again...saving money is not difficult at all. You just need to have the right attitude and set some goals for yourself. Say no to the “hand to mouth mentally”, that's teaching yourself to live a poverty stricken life. You must save and create reserves for you and your family, otherwise you will remain the way you are now and never have any meaningful progress in your life.

One of the main reasons we are going through the financial crisis in the United States is that we are expose to temptation on a daily basis. We are infected by the “I want”, “I need”, and “Give me” bugs. Many people are worried about the H1N1 bug, it is something that we need to be aware and address, but where are the news about the number of families destroyed by the “I want”, “I need”, and “Give me” bugs. The family that is destroyed because of the husband that instead of bringing home the hard earned money, he goes to address his personal needs first for a “new toy”, or the wife that wants a new pair of red shoes to add to her collection of 103 different tones of red shoes she has in her closet. Let not forget Junior, who we have not taught about self-control and money management and he is crying “Give me, give me, give me” and we run to give them in our fear that they will develop a case of lack of self-esteem, like the new toy is going to solve that.

Temptation can come in many forms and includes spending money. In today’s society we are constantly bombarded with marketing. Marketing is all around us wherever we go on signs, TV, Radio, Internet, even in our own clothing in the form of tags and labels, it’s everywhere. Marketers are constantly coming up with new ways to expose us to their products and of course tempt us. We are constantly in a race to spend our money, as soon as we have received the money, we are looking for ways how to spend it.

So what can can we do? Temptation involves a choice. I requires that you arm yourself and set war on your temptation. In addition, avoid those places that cause you to spend your hard earned money. You will surprise yourself at how much money you save by doing this. Here is a challenge for you and your family, take a look at your expenses over the past 30-60 days, and find expenses that could have been avoided and make the conscience decision to avoid those places in the future.

In conclusion, money is important in order to survive in this world but it is only a tool. Since it is a tool, do not enslave yourself to it, learn the management of this tool to help you in achieving your goals. Make it a goal for 2010 and beyond to manage your household budget properly.

Teaching Teens About Money Management

Most of the times parents complain about their teenagers and their expenditure habits. As “difficult” it may seem to you, it is important to teach them early about money and money management. Having a constant allowance, source of income and their savings account can teach them about the importance of savings, how to manage their resources, and to make financial decisions about their expenditures, since they will see the impact of their decision on their account.

In addition to teaching them about saving, it is important to educate them about the difference between good and bad debt. In today’s environment, teenagers are exposed to credit card marketing enticing them to register for a credit card. It is important for them to learn early about the use of credit cards and the impact of the bad use of them.

Kids these days are becoming more and more aware of their family's source of income and financial status. They apply these money-spending principles when they venture out on their own. Thus, it becomes more of a parent’s responsibility to start “training” their teenage kids to use their money wisely.

Here are five tips on how to teach your teenagers about money management:

1. Lead by example - This in my opinion is the most important step. With your lifestyle, the children will see how you spend your money. If they see you allotting a certain amount for a specific household need, they will eventually do the same when they get to earn their own keep.
2. Open a savings account – Help your teen open a savings account. It is important that the account is in THEIR name. This will give them an instant financial responsibility. Many banks offer starting accounts, many geared to minors, where there are no monthly fees. The idea here is to get them motivated about the saving process. When they receive their statements and see their balance, they will be able to see the impact of their decisions. As they see their account growing, it may motivate them to continue saving. 
3. Teach them how to manage their money – Show them how; do not make the decisions for them. Sit down and explain to them how to manage their own account, and the rewards that they get from saving. Help them review their savings account statement, so they can see how much money was deposited into the account and how much money was spent and where. This will help a teenager later in life with the management of a checking account.
4. Construct a “spending plan” – I suggest that you do not call it a budget, unfortunately many people feel that a budget is restricting their lives. The idea is to make it fun, educational, and for the teenager to gain a sense of responsibility. Instead call it a spending plan, this can be fun for the teenager to think of the ways they can wisely spend their savings.This will help them feel better about saving money since they will have a target to work toward.
5. Develop a “saving plan” – Now that you have helped your teenager to develop a series of goals on how they could wisely spend their money, you need to show them how much money they need to save monthly to achieve their goals. This is a learning experience for the teenager since it may be their first savings account.

Teens can learn at an early age about money management. If you implement the plan above you will provide your teenager a lesson in life that will prevent future financial failures and something that they won’t learn in any textbook in high school. It is important for them to understand purchase decisions, and the management of the money they earn. It will teach them that they do not have to waste money on expensive stuff that they don’t really need. You will help your teenager to grow up being a responsible adult at least money wise.

Do You Really Need to Buy A New Car?

In our society today is common practice to change cars every three to five years. People keep on switching to new car for no reason. Changing cars has become a way for people to express and show their status. Every year there are so many new car models coming up. So they keep on changing the car whenever they saw some new models that they like.

I have heard people saying this: “Since I need to pay for my installment every month, then why don’t I switch to a better new car?” It seems like paying car installment has become part of people’s routine life where if they don’t pay for the installment, they don’t know what to do with the money. Maybe people have forgotten that they don’t have to pay for car installment if they don’t want to.

I know that I may offend a lot of people by saying that buying a new car is not necessary. I am not saying that the purchase of a car is not necessary and that the replacement of a car that is no longer fitting the initial needs of the family is a luxury. What I do ask is that next time when you get the itch to buy a new car to be honest and ask yourself; Is it necessary? Do you want to buy it because you need it? Or you want to buy it simply because you wanted to show off to your friends your new toy? Do you buy the car to boost up your ego? If you answered yes to any of these questions, then you may want to reconsider the purchase of the car.

Consider the amount of money saved per month and what you could do to improve your family's wealth, like paying extra toward the house loan. This way you can finish your house loan faster, increase your equity and reduce the interest. Also, you can use the extra money to eliminate/reduce your high interest credit cards. Another option is to use the extra money to do some investment. These different use of the extra money saved by not rushing to buy a new car will improve your financial situation.

The Importance of Family Budget

Many times people complain about being in debt or not knowing where their hard earned money went. When they are asked about their budget, how much they owe, which expenses they can cut, they just stare at you as if you were talking to them in a foreign language. What is truly amazing is when they refuse to invest in a family budget and expect to get out of debt and/or build financial wealth.

I am always amazed at this, how can you get out of debt if you don’t even know your current situation, if you are not willing to work to change your current situation. How can you achieve your financial goals if you don’t even know where your money goes. Remember, you cannot arrive to where you want to be if you don’t know where you are right now and what will it take to meet your financial goals. Those who fail to use a family budget often end up with family problems and worse yet, devastating losses all of which could have been prevented with a little bit of planning.

The purpose of family budgeting is:

1. Provide valuable information to make informed decisions.

2. Cutting costs

3. Gaining control and curbing expenses

4. Lead a stress free life when it comes to your household finances

5. Starting to save and build up wealth over time.

Budgeting is not just about restricting spending and living a cheapstake life. It is about informed decisions, action, and sustained discipline when it comes to your household finances. It acts as a guide so you know where all the money you bring goes on a monthly basis. It is not intended to restrict your life style, but to help you lead a stress free life when it comes to money matters. However, family budgeting does not have to be complicated like many people are lead to believe. It does not require an accounting and/or finance degree. In fact, I suggest that when you start your family budget you keep it simple.

I suggest that you have a written family budget. Why a written budget? Having a written budget makes you accountable for your finances. Most people don’t think about how much money they spend per week or monthly, but when you write down your expenses on a piece of paper or spreadsheet, it provides you awareness of your spending habits. It creates a framework to getting your family ahead financially and build wealth.

Here are a couple of places where you can start gaining understanding of your current situation:

1. Bank statements

2. Credit card statements

3. Credit reports

4. Tax returns

So what simple steps can you start taking today to address your current financial situation:

1. For small deficits you could start by reducing expenses such as: entertainment, cell phone plans, cancel pagers, bring your lunch to work, cut your latte macchiato in Starbucks, and catch the subway or bus to work to name a few.
2. For large deficit, you will need to make more drastic changes such as: increase your income, downsize your vehicle, downsize your accommodations.
3. For those whose income covers all of the expenses but does not provide surplus, you may still want to take a look at your spending habits to allow for savings and building wealth. Register to receive our free newsletters with valuable information on how to create savings and build wealth over time.

The secret of true financial wealth is not in how much money you make, but how much money you get to keep. Do you want to accomplish your financial goals? Do you want to educate yourself on how to build wealth over time? Work from home or part-time to generate multiple stream of income? If you answered yes to any or all of these questions, I invite you to register to our wealth building network blog to receive our updates packed with pearls of wisdom, be informed about recommended reading and upcoming e-books, and other valuable information on how to build, grow, and protect your financial wealth.

How Do I Know If I am Eligible For Student Loan Debt Consolidation?

Many times people complain about being in debt or not knowing where their hard earned money went. When they are asked about their budget, how much they owe, which expenses they can cut, they just stare at you as if you were talking to them in a foreign language. What is truly amazing is when they refuse to invest in a family budget and expect to get out of debt and/or build financial wealth.

I am always amazed at this, how can you get out of debt if you don’t even know your current situation, if you are not willing to work to change your current situation. How can you achieve your financial goals if you don’t even know where your money goes. Remember, you cannot arrive to where you want to be if you don’t know where you are right now and what will it take to meet your financial goals. Those who fail to use a family budget often end up with family problems and worse yet, devastating losses all of which could have been prevented with a little bit of planning.

The purpose of family budgeting is:

1. Provide valuable information to make informed decisions.

2. Cutting costs

3. Gaining control and curbing expenses

4. Lead a stress free life when it comes to your household finances

5. Starting to save and build up wealth over time.

Budgeting is not just about restricting spending and living a cheapstake life. It is about informed decisions, action, and sustained discipline when it comes to your household finances. It acts as a guide so you know where all the money you bring goes on a monthly basis. It is not intended to restrict your life style, but to help you lead a stress free life when it comes to money matters. However, family budgeting does not have to be complicated like many people are lead to believe. It does not require an accounting and/or finance degree. In fact, I suggest that when you start your family budget you keep it simple.

I suggest that you have a written family budget. Why a written budget? Having a written budget makes you accountable for your finances. Most people don’t think about how much money they spend per week or monthly, but when you write down your expenses on a piece of paper or spreadsheet, it provides you awareness of your spending habits. It creates a framework to getting your family ahead financially and build wealth.

Here are a couple of places where you can start gaining understanding of your current situation:

1. Bank statements

2. Credit card statements

3. Credit reports

4. Tax returns

So what simple steps can you start taking today to address your current financial situation:

1. For small deficits you could start by reducing expenses such as: entertainment, cell phone plans, cancel pagers, bring your lunch to work, cut your latte macchiato in Starbucks, and catch the subway or bus to work to name a few.
2. For large deficit, you will need to make more drastic changes such as: increase your income, downsize your vehicle, downsize your accommodations.
3. For those whose income covers all of the expenses but does not provide surplus, you may still want to take a look at your spending habits to allow for savings and building wealth. Register to receive our free newsletters with valuable information on how to create savings and build wealth over time.

The secret of true financial wealth is not in how much money you make, but how much money you get to keep. Do you want to accomplish your financial goals? Do you want to educate yourself on how to build wealth over time? Work from home or part-time to generate multiple stream of income? If you answered yes to any or all of these questions, I invite you to register to our wealth building network blog to receive our updates packed with pearls of wisdom, be informed about recommended reading and upcoming e-books, and other valuable information on how to build, grow, and protect your financial wealth.