Category Archives: Savings
Life can throw you a curve ball at any moment and you won’t know what hit you. This unpredicted curve ball can come financially as well when you need lots of money very urgently. Setting aside money every month can contribute to making an emergency savings fund and makes it easy to have cash during the times of need.
Meaning of emergency fund
When you have a financial shortfall and have a fund to lean back on which can support your life even further for more time and in the case of emergencies is an emergency fund. Having a savings account is thus important when you fall short of cash or in the case of unforeseen incidents.
When you start saving and not use it for a long time it makes up for a long-term savings fund as you would have accumulated lots as you wouldn’t have needed it in the past. So the idea is to have two funds which you can use depending on the type of crisis.
Money matters are always stressful and you must have a plan to fall back on if something goes wrong. Therefore you can use plan A and plan B in terms of emergency funds with the following emergency fund tips.
Divide your funds into two which will make up for your plan A and B. Having two emergency funds does the trick to lessen your burden and they are given below.
Short term emergency fund – Use this short-term emergency fund when you have an immediate requirement of cash and when you have none of it. When there are immediate emergencies like a car accident or breakdown or making an emergency payment use this short-term fund to keep you going and not falling behind on anything.
Long term emergency fund – In the long run somewhere down the line you will need a huge sum of money for meeting up with unforeseen expenses like when there is a natural disaster and damages your home or a family member falls ill and needs an immediate operation. With this case, you must remember to have sufficient emergency fund allocation in your account.
These two steps become a stepping stone to save for any unexpected situations.
How to save?
In this growing world, everyone has various needs and wants and satisfying them can take a whole lot of money so the question one often asks is how to save. If one wants to create an emergency fund consider to cut down your expenses and wastage of money. Saving little every month makes a big difference if it is too much then consider putting money aside every three months or six months. You can also consider emergency fund investment option where you invest in a fixed deposit. With these measures, one is sure to build their savings and use when required.
How should the fund be?
Your fund must have certain qualities that will make it easy to use and you must not have any trouble in getting the cash and hence your fund should have the necessary qualities.
Low risk – When you are making long term savings by investing in bonds or shares you need low risks as you cannot afford to have a loss when you are trying to save money.
Liquid cash – Your savings must be in liquid cash if not all some of them as emergencies can crop up anytime. Assets like bonds and shares must be able to convert into cash easily.
Accessibility – One must be able to access cash in a short notice for which short-term funds need to be created and the long-term funds can be accessed when you have a bigger emergency.
Steps to start saving for the unexpected
Getting started is the most challenging part in saving for the unexpected but with the breakdown of the steps one can easily get started and gain momentum. Here’s how you can build your fund.
Crack it to the basic step – Select what type of fund you want long or short term after this see how much you can contribute towards your fund every month and how you can achieve the target.
Cut down on the unnecessary – If one can cut down on unnecessary expenses like buying things you already have and eating out this can lead to more contribution towards your fund.
Automatic transfer – If you find it troublesome to manually make your emergency fund create a separate account and make an automatic transfer to that account.
Transfer investments – when you invest in shares and get the returns directly make it transferable to your emergency funds.
Reward yourself – When you achieve the given target of your savings reward yourself by doing something other than the usual for yourself. This will encourage you more and bring in confidence.
Summing it up
Savings are a blessing in disguise in case of emergencies, be it big or small. It is important to have money set aside for any type of unforeseeable situations. Start saving now and not worry later is the biggest point of having an emergency saving fund.
Peter Christopher is the finance blogger at Finance Care Guide and a guest columnist for many blogs that deals with personal financial management. He has devoted himself to full time speaking, writing and consulting on personal finance management. Visit him on Google Plus and Twitter.
Life is just not just about big dreams, high end luxuries and expensive comforts. Amidst your hectic schedule and working hard to make your both ends meet, you may often forget to enjoy the simple pleasures of life. These pleasures, though may seem trivial or frivolous in nature, can bring immense satisfaction to you. They are called the finer joys of life.
Ever wondered about the finer joys of your life? Well, here is a small list:
- Looking at the joy on your child’s face when you take them for their dance class
- Dropping your wife for Zumba classesen route to your office.
- Pursuing that long-cherished hobby of learning to play the guitar.
- Watching your favourite singer performing live in a concert.
This list can be endless. You have an earnest desire to live these finer joys, but then there is the other side of the coin which calls for being practical to make them come true. You need to make time to do these little things you want to do as well as manage your finances to spend about the same.
Managing your time is relatively easier. You could start waking 15 minutes earlier every morning. Or you could limit your screen or digital media hours. You can even set aside a dedicated hour of the day for ‘me time’ and ‘family time’.
But, what about the money part? This requires a conscious and systematic planning at your end. Here is what you could do to achieve the finer joys in your life without worrying much about the finances.
- Make a Budget
Write down income and expenses (better, if maintained in an excel sheet). Review once in a fortnight or a month. Analyze the reasons if you have exceeded the budget on some counts. Try and live within the budget.
- Save Smartly
You should aim to save at least 15 – 30% of your income to meet the key milestones of your life – child’s education & marriage, own home, retirement, etc. Keep a long term perspective and allocate your savings to a diversified portfolio comprising fixed income securities, equity funds and insurance plans (life, health and non – life) for a better risk-return trade-off. Also, keep an emergency fund, equivalent to your 3 – 6 months, aside to meet unforeseen expenses. Similarly, you should allocate a part of your income towards the expenses that you will need to incur on the finer joys of life. This way, you and your family can enjoy the small pleasures of life without creating an additional burden on your budget.
- Invest in a Money-back Policy
The finer joys can occur at different stages of your life. To be able to enjoy them as and when the time comes, you need money at periodic intervals. Rather than juggling your finances impulsively in future for such things, it is better to plan for regular payouts ahead of time. A money-back planis quite suitable with this regards. It gives a guaranteed income flow at fixed stages during the policy term, so that you have the money when you need it the most. You could plan the payouts as and when you desire to fund the finer joys of your life. With a money-back plan in your investment kitty, you have an additional source of income in hand and you can glide through your recurring financial commitments smoothly.
If you plan your time and finances well, you need not forget, sacrifice or postpone those finer dreams in your life. Start planning today, your little joys are waiting to unfold!
It may be the season when the pumpkin spice lattes when the leaves are changing. The holiday shopping rush is not too far away. You may be getting ready to prepare your gifts list, there are a few tips that will give you a head start and keep your budget intact.
As per the National Retail Federation, holiday sales are expected to increase 3.9% to $602.1 billion in the month of November and December. This number is a little bit higher than the 2012 3.5% rise in sales, and the forecast is also above the 10 year average of 3.3% growth. This NRF forecast is deeply blending the confidence of the consumers, consumer credit, disposable personal income and monthly retail sales releases.
Experts believe that this season’s spending increase is nominal, and many companies are also seeing average spending on the uptick, at about $160 per person this year. The shopping season stretches for a longer duration over the next few months leading up to the holidays.
This is that time when you can use it to your advantage. You can start purchasing from now onwards so that you don’t have everything bundled up in November and December. It will create a big pressure in your wallet.
There are a variety of shopping deals during the holiday season. The first set of deals start rolling out in September and October on apparels. This year you can expect many good deals on apparels due to weaker back-to-school shopping period. Put your hands on the layaway programs as early as possible. Go out and buy the best toy for your child at a much cheaper price.
Once the clothing sales are over, the prices on electronic goods will start going down. This will happen sometime around Thanksgiving. You can expect the maximum savings on that particular day. You can also save a good amount of money on Black Friday and Cyber Monday. Many companies offer lucrative deals to entice the consumers to come off their couch and get into the store.
The final sale starts in the month of December around Christmas time. This is the time when stocking stuffers put their items on sale. You will get good deals on different accessories along with consumer electronics.
This year mobile companies will also do good business from the previous years because they will allow their customers to shop from anywhere and anytime.
If you can learn how to save money, then you will know how to spend wisely. It is an art of knowing on what you need to spend necessarily and not on what you want. Many a times, we spend a lot of money on different things that are not practical and are bought on impulse. There are some practical tips that will help you to avoid such unnecessary spending.
1. Going for second hand items – There are some items like furniture or curtains that can always be bought second hand. As long as your personal hygiene is not in question, you can always go for used items. It will save you a lot of money.
2. Stop doing unnecessary expenses – Many people like eating out in fancy restaurants or going to their favorite coffee shop. You can save a lot of money if you can skip going to these places. This will also enhance your culinary skills that you never thought you had.
3. Stop going to places where you feel tempted to spend – Many people like going to the malls and see all kinds of fancy items that will tempt you to spend. Before you can realize anything, you might have purchased many items that were not at all necessary because the saleslady sounded so convincing. If you want to save money, then you need to stop going to such places where you feel tempted to spend.
4. Finding out ways for practical entertainment – Many people like watching movies or listening to their favorite song, but that does not mean that you have to spend every time on the matinee shows or go to see a concert only to see the artist singing your favorite song. Many movie studios do free advanced screening to promote their film. You can also try to get free tickets for night shows and watch your favorite movie. And if you want to hear your favorite song, go online and download it free of cost.
It is not at all tough to find ways of saving money. Instead of going to the store, you can try online shopping where you get good discounts and other items at a cheaper price. When you are able to buy things online, it means that you don’t have to drive and burn fuel. If you are a student or you go to work every day, then you can talk with your colleagues and arrange a carpool. This is another good way of saving money in gas and parking fees.
There are many other ways of saving money in your everyday life. No matter, how much you save, always remember that a penny saved is a penny earned.
As we are nearing to our retirement age, we most of the time feel worried about the cash flow and where it’s going to come from. Many a times, people think a little differently about retirement. They feel they will go more on holidays with their families once they retire, spending more time with them and do all things that they were not able to do when their life was busy at work.
Its never to late to start planning about your retirement savings. And as you are getting close to your retirement age, you need to make sure that you have a good amount of savings protected for you. It would be very disappointing if you have very little or nothing left before you retire. So its important that you have a good amount of savings planned well ahead of time in the present economic climate.
When you have to do the investment, do it in the right time. If you delay in savings for a few years, you will end up losing a lot of money from saving and this will have a dramatic effect on your retirement income. Recent studies show that a delay of 5 years can have a big effect on the value of your investment. The longer your money is invested, you can expect bigger returns that will be for your own benefit.
Once you retire, you can take out 25% of your retirement savings as a Tax Free Lump Sum. This will create more income in retirement. If it is invested correctly, it will be tax free and allow you to retain the lump sum, and you can use it for whatever you like. For example, a dream holiday, or buying a sports car etc.
Don’t delay in creating your retirement savings. It will be too late if you start creating your retirement savings at a later part of your life. There is a limit to what can be done if action needs to be taken right at the point of retirement.
Browse through the internet and you can take a free consultation with one of the expert financial advisors. They will guide you in planning your retirement savings.
Many banks have updated their rates on the savings and the checking accounts. Savings Plus is a credit union account that offers the value and convenience of a traditional savings account. Besides, you get additional facilities like:
- You earn competitive rates on your deposits.
- You get the convenience of cash withdrawals in ATMs
- You can authorize transfers through dial up and ebranch
- Call the customer care to get the credit union check mailed to you
- Savings plus can provide automatic overdraft protection for your share management account.
Savings plus is ideal for systematic savings. Visit your branch to know the current savings rates. It earns more than a Share Management Account (SMA), but it doesn’t lock up your funds the way a term savings account would.
- Do you want to sign up for apporama deals?
An App-o-Ramma (Apporama) is when you apply for tons of credit cards, leveraging your new credit line for the following benefits:
People swipe their credit card for multiple times to make more money on the credit card bonuses like cash back, gift certificates, free plane tickets etc.
They leverage their new credit line into a high interest savings account of CD and earn 5% plus interest on the money borrowed at 0% APR introductory rates.
They take new credit at 0% APR to pay off high interest bearing loans, mortgages, and automobile payments.
The disadvantage of doing App-o-Ramma (Apporama) frequently is that it will hurt your credit scores tremendously. The scores will down by 80-100 points. If you have good credit ratings and you don’t have any plans of applying for any new loans anytime soon, then Apporama is a great way to rack up free money from credit card offers and high interest savings accounts.
If you are thinking of opening a bank savings account that earns the highest interest rate, you will be considered as a savvy investor. You may want to save money for your home, family, education or any unexpected emergency, this kind of savings account will be very helpful for you in the long terms. You not only get to earn high interests but have the money safe and available in your bank account.
Standard big bank savings accounts don’t offer high interest rates on the savings account. You will get to earn better interest rates from online banking account, brick and mortar banks, credit unions and other institutions that are paying interest hovering around 5 percent and better and very important point to be kept in mind, most of them are free from any fee. Thus, these kinds of accounts offer a high annual yield than standard savings account.
One question that you may have in your mind is how these kinds of institutions are able to offer great rates? The online banks especially offer better interest rates from the brick and mortar banks because they don’t have any overhead on them. The savings is thus passed along to you in the form of high interest rates. Because of the stiff competition in the banking industry, traditional banks have entered the fray by developing online savings products of their own. This allows them to offer high yield savings accounts.
It is an ideal time for you to open high interest savings bank account in those institutions that offer higher interest rates. You will be able to find good number of institutions because the banking market is going through a lot of competition and they have to offer best deals to attract the investors. Go online and compare the interest rates with different institutions. You will know the rates offered, limitations and terms of services with a click of the mouse.
In order to stay in the market, most banks are offering a variety range of products and services. There is usually no minimum balance fee, easy online access, direct deposit, free on line banking that allows you to view your balance, transfer funds, convenient fee free, ATM transactions and checking account options. You also get the features of setting up external banking that allows you transfer funds from one account to another with different banks.
Be sure to understand the terms of services of the financial institution before opening an account with them. Some may have limitations or restrictions that may not cater to your needs. Due to the competitive market, there is no reason you should invest your money foolishly at lower interest rates or give your business just to any bank around. Always do your research thoroughly and make the best decisions before investing your money. You may find that it is prudent to move your money into a high interest rate savings account online or offline that yields better financial results.