Category Archives: Investing Basics

Getting Specific with Savings Goals for the Year Ahead

We’ve talked before about the idea of setting goals so you can save what you want to save (and ideally more besides). But there is a big difference between setting goals and setting specific goals that are packed with detail. The difference is mainly that detail makes it easier to be held accountable to those goals.

Take a look at these two examples:

#1:  “I want to save as much as possible during the coming year.”

#2:  “I want to save $5,000 within the next 12 months. I will do this by cutting back on spending and finding better deals for utilities and other outgoings. I must save at least $416.66 a month to achieve this goal.”

If you had to pick one of these two examples, which one would you pick to get you up and running and headed towards your goal this year? Most people would automatically go for the second example when presented with both of them. And yet if they were left to their own devices they might end up going along with the first one without even thinking about it.

The trick to remember is to include as much detail as possible in your savings goals. It doesn’t matter why you are saving – there doesn’t even have to be a reason beyond wanting to create a cushion to protect you in case of financial woes. The more information you can add to your goal, the more personal it becomes. This in turn makes it easier to keep your goal close at heart so you stand a much better chance of achieving it.

You’ll also notice the second goal gets a lot more specific in terms of timing. Not only does it specify the amount of money you want to save, it also divides it up. This means you know exactly how much you need to save each month in order to hit the target at the end. If you fall short, you know you need to up the ante over the rest of the year. If you end up saving more than the allocated target amount in January (for example) you should still aim to save the monthly amount from February onwards. The additional sum can act as a cushion in case you fall short for some reason later in the year.

Getting into the specifics of things doesn’t just apply to monetary goals. You can use this technique in all kinds of situations. However it certainly works well if you would like to finish this year with more cash than when you started. It doesn’t matter whether you want to put the money in a standard savings account, stocks and shares or anything in between. Setting a proper goal to begin with is the aim here, and you might be surprised how much you can achieve when you spend time working out the details. Try it now and see just how much easier it can be to save this year.

3 MORE Ways to Free Up More Cash to Invest in 2014

In the last article we looked at three easy ways to find more cash to sink into your best investments next year. Now we have three more ways for you to get you into the saving and investing mood in time for 2014.

1: find ways to cut your food bill

There are countless ways you can do this, including couponing, which some people regard as something of a hobby. You can save incredible amounts of money doing this as well. Some ideas include using cheaper cuts of meat and making them go further by bulking out meals with cheaper vegetables. Look out for special deals that allow you to buy in bulk too. Just be sure you would usually buy these items and don’t be swayed by deals on things you wouldn’t normally buy anyway. Check the price against the single unit price as well, just to be doubly sure you are getting a discount worth having. Some stores are crafty and try to make things look better than they are.

2: refinance the mortgage on your property

One thing all homeowners should do is to check the terms of their mortgage every year or so. And yet few people do. This means there is every chance you could be paying more than you need to each month.

You have two choices here if you can refinance more cheaply. You can either keep paying the same as you were so you overpay on the mortgage and pay it off sooner, or save the additional cash for some other investment. The former is a great idea but make sure your mortgage allows for it.

3: stop spending!

This isn’t a frivolous addition to the list. Indeed it is one of the easiest and best things you can do when it comes to freeing up more cash to invest. The vast majority of us spend more than we really need to. Using the tips provided in this article and the ones in last week’s article will certainly help you invest more, but reducing your spending will do a lot to help as well.

Perhaps you can find some time over the festive season to think about your spending habits and whether you can change even just one or two of them. This should help you get an idea of where you waste money. For example you might treat yourself to a Starbucks coffee every morning on the way to work. It may cost a few dollars a time and over the course of a five day week this can really add up (especially if you buy a croissant or something similar for breakfast to go with it). If you add it up over the course of a month (or even a year) you might be surprised how expensive it can get. Buy a travel mug and make your own coffee to take on the go instead – it will save you $$$.

3 Ways to Free Up Additional Cash to Invest in the New Year

If you are feeling guilty over the amount of money you’ve splurged this Christmas, it’s not surprising you might be looking at January to be the month when you start cutting back. The good news is you can save an impressive amount of money and free up a significant amount of cash to invest next year as well.

Let’s look at just some of the ways you might do this in the weeks and months to come.

1: look at reducing all your bills

Are you paying the lowest possible amount for your bills? We’re talking about energy bills, phone bills, and internet bills not to mention several others. If you want to start cutting back on your outgoings this is the best place to begin. Even if you shopped around for good deals a while back and got all the best ones available, they may not be so good now. Make sure you have the chance to spend less every month by evaluating your current bills to see how cheap they really are.

2: switch to home cooked and prepared meals instead of pre-packed

Are you a good cook? You don’t need to be brilliant to learn how to cook a few decent and nourishing meals in bulk that can be easily frozen to enjoy later. This saves time and is far better than buying ready meals – not to mention a lot cheaper.

Get a couple of basic cookery books if you need them and start expanding your repertoire. Start taking a quick packed lunch to work too. A piece of fruit, a drink and a sandwich is an easy lunch to put together the night before. Cook a batch of pasta or rice too, and add something different every day for a quick and easy option that is also very cheap.

3: sell anything you don’t want or need

There is a lot to be said for de-cluttering your home. It will feel very freeing and give you a clear head too. You can also make money from doing it, because you can sell all manner of things on auction sites like eBay. You could also hold a garage sale if you want to.

It will take a little time to list things on auction sites but the more popular items are the easier it will be to get better prices for them. Be sure you watch as the prices rise on auctioned items in the last few hours and minutes. The total price for everything could be a lot better than you might think.

As you can see there are lots of ways to earn money if you want to free up more cash to invest in various ways. Make sure you have a basic savings account at the very least, so you can squirrel away all the cash to keep until you know how you will invest it. 2014 could turn out to be a very profitable year.

Setting Your Investment Goals for 2014

Every New Year brings with it hopes and dreams and a fresh set of challenges. It is the perfect time to look back on the year that is coming to an end, and to look forward to the twelve months that are about to begin. If you had investment or savings goals for 2013, this is the ideal time to consider how you actually did with them. Did you meet them all? If not, why not? Sometimes there are good reasons for not meeting particular goals but other times nothing can really be used as an excuse.

However you can use the information you have gleaned over the past twelve months to influence the New Year that is about to begin. Most of us manage to find a little bit of quiet time over the festive season. It could be on Christmas Eve when all the wrapping is done and we’re just relaxing with a well earned drink. It might be on Boxing Day when the main festivities are over and we’ve had a lie in. It could be in that no man’s land in between Christmas and New Year, when everyone seems to be in limbo, waiting for the New Year to begin.

Whatever time you have, find a couple of hours to set aside for your own needs. You can use this time to look back and to look forward. Grab a notepad and pen and maybe your list of goals for the year that is about to end. See how you did with them. Think about the potential for achieving more in the coming year. If you did manage to achieve your goals (or at least some of them) take the time to congratulate yourself on your efforts. You’ve proven it is possible to save and invest money when you put your mind to it. What could you do in the next twelve months?

It is important to recognise our goals change over time as well. It could be you set a savings goal for 2013 and it changed because of a change in circumstances. Now you can look ahead with fresh information and set more appropriate goals that will hopefully take you through the twelve months ahead.

Whenever you have the chance to achieve something worthwhile, it is worth working towards it. Consider your financial position at the end of 2013 and think about where you would like to be at the end of 2014. Do you want to save up for a particular goal? Do you want to achieve more than you did this year? Are there new investment opportunities that would suit you this year that didn’t suit you last year?

Whatever the answers might be you can be sure you will find them more easily by setting aside some time for your needs this festive season. Remember, eradicating debt should come first, and then you can focus on looking for the best and most rewarding investments for 2014.

Can Research Save You Money at Christmas?

We tend to focus a lot on investing money throughout the year, but trying to keep this up as we get closer to Christmas can be difficult. However even though you will likely spend more than usual on gifts for other people, you can still save money while doing so.

The biggest risk at this time of the year is spending impulsively. This means you can end up spending a lot more on something that you might be able to get more cheaply if you look elsewhere. And this is where research comes in. Even if you end up going to your local mall to buy your gifts, it is worth getting started by looking online. You can get ideas for gifts online that you wouldn’t otherwise have, and what’s more you can often find discounts you wouldn’t get elsewhere either.

This is what we mean by taking a little extra time to do your research. If you get it right you might even get some cash back on your purchases. Look for cashback sites online that allow you to make a percentage back on everything you buy through their links. This can really add up when you’re doing your Christmas shopping, and whatever you earn you can claim and put back in your savings once the cash becomes available.

Some people think shopping online can cost you more because of the postage and packaging charges, but this isn’t necessarily the case. Plenty of companies provide cheaper deals to persuade people to buy with them on the run up to Christmas, and this can include free delivery too. When you consider that some companies sell items online you may not find in the shops at all, the options and possibilities for saving cash are starting to add up.

Another tip is to look for discount vouchers online. These can be used for online purchases and sometimes offline ones as well. Check the details of each voucher to see what is required for you to comply with it. Sometimes it might give you free delivery or a discount off one or more products when you go to a particular retailer.

In short, there is every chance of getting plenty of discounts at the time of the year when many of us are spending more than we should. It may take a little extra time but the potential savings you could be rewarded with will help your finances get through this period of time successfully. It’s hard not to spend money at Christmas, but there are ways to reduce the outgoings so you don’t worry about having bills to pay in January.

One final tip – don’t leave your festive shopping until the last couple of days. The less time you have the fewer options you have, and the more likely it is you’ll overspend and raid your savings or hit that credit card. Give yourself plenty of time and you’ll be just fine in celebrating the festive season within your budget.

Write Down What You Spend: You’ll Save More

Do you have any idea how much you spend on a regular basis? This is a tricky question to answer unless you happen to write everything down. Few of us do this and that’s a shame – if we did we’d have a much more accurate view of our spending habits.

But that’s not all. Writing down everything you spend makes you more accountable to yourself. It makes it a lot harder to spend money frivolously or waste it in any way. If you’re struggling to make ends meet you should consider grabbing a notebook and pen and writing down every cent you spend for the next month. You may find you can live from payday to payday after all, so long as you figure out where your money is going.

This might sound unlikely but it’s worth a try. After all, all you’ve got to lose is a notebook and a few minutes of your time. And you could end up gaining a lot of money as a result.

When should you start?

How about right now? The sooner you make a start the easier it will be to see where your money is going. You might also want to think about paying in cash more. It might be a dying art but in the end it is harder to spend money if you see it slipping out of your hands.

Reality sets in

This is the main thing to expect from this exercise. You’ll end up seeing exactly where every cent goes, and that’s good news for you. You’ll see where you spend money frivolously and where you can save money quickly and easily. If you think you don’t have any cash left to save each month you might be mistaken. You just need to figure out your spending habits so you can identify where that extra cash could be freed up from.

The trick to remembering to write everything down is learned with time. You can keep a diary on your phone if it suits you better than using a notebook; you’ll have it right by your side when you need it then. Just remember to fill in everything, even if you buy a candy bar for fifty cents. Everything counts – that’s the motto of this exercise. By doing it properly you can get the best results and the best amount of surplus cash left at the end of each month.

If you feel a little self conscious about keeping a notebook like this, you don’t have to share it with anyone. When you’re in company just make a quick note on your phone or say you just have to send a text if need be. Either that or remember the details and write them down as soon as you can. A 100% accurate record is the ideal outcome here, so you need to make sure you can work towards that. Keep it going for a month and you might be surprised at what you learn.

Starting From Zero: Investing for Newbies

If you’ve just left school or university, and you’re about to embark on your first full time position, congratulations are in order. This is a big time in your life – not just in terms of your career but in terms of your finances too. If you’ve attended college or university already you may have some student debts to pay off in the future, which makes it all the more important to focus on moving ahead with strong financial habits that will support you in the future.

Managing a larger income for the first time

Your first full time job won’t net you a huge income, but it is likely to be a lot more than you have ever received in the past. This opens the door to temptation, and the desire to spend it all as fast as you receive it. Don’t do this if you can help it.

Instead, take the time to sit down and focus on all the plans and goals you have for the future. Even if you have nothing in particular in mind at this stage, it still makes sense to start some good savings habits right from the start.

For example, make sure you figure out your outgoings each month and subtract them from the money you’ll earn. Even if all you do is get the best instant access savings account on the market today and put your money in there, you’ll be allowing it to build up while you decide what else you can do with it.

Is it too early to invest for your retirement?

It’s never too early for that. You don’t have to make it your first priority but it should be near the top of your list of financial things to do. The more you save and the earlier you do it, the more financially sound your retirement will be.

Take your time to make the decisions that will affect your future

You may start finding out more about the stock market and other investment opportunities that will come up. There is no need to focus on getting involved in these to begin with if it doesn’t suit you. Perhaps the most important thing at this stage is to learn more about various investments so you can figure out which ones will suit you best. No two people ever live the exact same lives, so you don’t need to follow the lives lived by others in order to find the results you want.

Whatever your initial monthly earnings are from your full time job, they will seem huge. However you will have deductions from your gross income before you get to see any of it, so you’ll have less to spend and invest anyway. This is one of the reasons why it makes sense to get things right from the very beginning. Learn about investing and saving now and you’ll be glad you took the time to do so. It will repay you long into the future.

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Are You Living By the 3 Month Emergency Rule?

While we all know savings give us peace of mind and something to fall back on if ever we need them, few of us actually live up to that knowledge. However if we don’t focus on providing enough for an emergency we could find ourselves in dire straits if that emergency ever made itself known.

The 3 month rule applies to the amount of money you need to get by for that period of time. The idea is you write down the net amount you receive from your job each month and multiply it by 3 so you know how much emergency cash you have to have on you. Most experts agree you should have at least three times your monthly salary tucked away just in case that source of income should suddenly be taken away from you. Since the stability of many jobs and industries is dubious at the moment to say the least, you never know how secure your own job might be.

This isn’t meant to alarm you, but it is wise to be prepared for anything. The question you need to ask yourself is this: how would you be able to cope financially if you lost your job tomorrow? Would you have at least 3 months worth of income saved up to see you through the next 3 months while you look for other work? If you can say yes, work on making that sum a little bigger if you can, to provide a bigger cushion. If the answer is no, make sure you work out how much you need to save and start saving, as soon as you can. Even if you cannot save the full amount before you need to start drawing on it (which hopefully won’t happen) at least you’ll have more than you would have had otherwise.

As you can see it makes good sense to prepare for the unexpected in case it does actually happen. It provides some breathing space in case you do lose your job, and therefore means you don’t have instant worries about bills or falling behind on your mortgage. The sooner you put these plans into place the easier it will be to get the peace of mind you want.

Of course, the other great thing about doing this is that it gives you an opportunity to sit down and take a closer look at the rest of your finances. How much do you currently spend each month on bills? Could you reduce this a little by looking for better deals elsewhere? If you could, you can put away a little less each month to cover those essential 3 months. Checking through all your finances means you can get a better picture of where you stand as well as preparing for the worst case scenario in the future. This will give you more security and make you feel calmer on a daily basis, even if your job does remain secure.

Six Months In: Have You Failed in Some of Your 2013 Financial Aims?

If you remember, around three months ago we looked at how your financial goals might be shaping up for the year. We tend to start a New Year with good intentions in many ways, not least of which is the financial sense. Of course things don’t always pan out as we hope they will, and even with the best intentions our plans can derail.

So while we looked in on progress three months ago, perhaps we should now do so again, now we are virtually halfway through the year. By now you will probably have stuck with some financial goals and all but abandoned others. Thus it is a good time to think about where you are heading for the remainder of the year. After all, there are still six months to go and if you refocus your energies now, it may not yet be too late to embark on some of the goals you have abandoned.

Why did you forget certain goals?

If you abandoned one or more financial goals, this is the time to ask yourself why. Did you find the goal did not actually meet your needs after all? Did you perhaps think some goals were more important than others, and so you focused on those first of all? It is not a problem to prioritize your goals; indeed it is often a good idea to do so. If you can do this you will generally find you achieve more because you focus on one above all others, and then move on to other goals.

When you review your goals, look at the ones you set to one side. Do you want to pick them up again or would you rather let them fall by the wayside? It isn’t wrong to go for the latter approach; you simply have to know whether you have genuinely no longer got a passion or need for that goal.

Finding a purpose for the next six months

If you want to make sure you get the most out of your year, now is the time to make sure you refocus. Look at the goals you have achieved and consider what else you could achieve in a financial sense for the remainder of the year. Even if you cannot fully achieve a goal in six months, you may at least be able to get closer to achieving it. It all depends on the goal, but you must make it realistic so you know how to make the most of the time you have left this year.

In the end, it doesn’t matter whether you are pleased with your financial progress thus far this year or not. It is what you choose to do from this moment on that will make all the difference. If you can make sure you are able to do your best and refocus your energies on your financial goals, you may still achieve more than you may think.

What Should You Do if You Simply Cannot Save for the Future?

The focus of this blog is to start investing money: sinking it into one or more investments so you have a nest egg to fall back on in the future.

However, all this relies on the fact you have at least some surplus cash to play with. What do you do if this isn’t the case yet you still want to invest for the future – or at least save something in case you need some cash in an emergency?

Having the ability to identify fruitful investing options, and at the same time know when and how to save the proper amount, is a skill most professionals need time to hone.  Due to the internet this special education is now more available than ever, with degrees like masters in accounting online helping people understand the importance of financial acumen and the ability to operate in the profession

Paring things down to the basics

This is step one, if you will. We all have a lifestyle we are used to. Sometimes we may need to strip this back so we can free up more cash for one reason or another. You can do this here if you haven’t already done so. Many of us could strip back our outgoings to the absolute basics if we needed to – and in some instances it is possible to strip things back a little further. You only need to read some of the inspiring blogs and articles that focus on providing tips and hints on eating on a dollar a day and other subjects to see how true this is.

Have you pared things back to the basics yet or do you still have more work to do? Re-evaluate your life in every area and see whether you can free up some cash so you are able to set some savings aside, even if you cannot invest anything else.

Things change

Many people go through periods in their lives when saving money is not an option. If, even after going through the stage above, you find you can’t free up any spare cash, don’t worry. It doesn’t mean you can’t still read and learn about saving for the future. You may just come across a way of doing it that would work for you. Indeed, you may discover a new method for making a little extra cash to help you along the way.

The moral of this story is to make sure you are always open to the idea of saving money. Even if you can only save a dollar or two every now and then, it instills in you a mindset that will help you through the hardest financial times. It will also lead you towards a brighter financial future, and this alone can be a positive experience when you are trying to save money for some reason.

The only way you will never save money for the future is if you decide it cannot be done. Even if this is true at present, it’s not a good idea to succumb to this mindset – it may just follow you around for longer than you’d like. As you can see, if you take the right stance you might just change your fortunes for the better. If you can do that, you could start saving money for the future sooner than you might at first think was possible.

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The Importance of Saving for Short Term Goals

We hear a lot about investing for the long term: for events such as our retirement in several decades from now, for example. However, we don’t tend to hear as much about short term investments and yet these can be just as important in many circumstances.

These investments are ideal when you have a short term goal you want to hit. This could be a goal that requires you to have a specific sum of money to achieve it, or it could simply be a savings goal.

Understanding short term goals

Here are some examples of short term goals you could go for, and how they factor in when we’re thinking about money.

  • A 6 month goal to pay off an outstanding credit card debt
  • A 3 month goal to save up for an online course to provide you with an additional qualification to help further your career
  • A 6 month goal to save $500

As you can see, it is enough simply to want to save a particular sum of money for a particular length of time. You don’t have to have something in mind to spend it on, or even a bill or debt you want to clear. Simply wanting to save is enough of a goal for anyone to aim for – and if you are successful in saving and investing that money for the short term, you’ll find it easier to do so for the long term as well.

Why are short term savings goals important?

We’ve already discovered one reason – namely that they can get you in the mood for saving for the long term as well. But there are other good reasons. For example they can help you achieve long term goals as well.

Take the above example focusing on the ideal of saving up for 3 months to invest in an online course to achieve another qualification. If you were to achieve this goal, you could complete your online course. You’d then stand a better chance of getting a better paid job which would allow you to save more money in the future as well. This is one of the best examples you could consider in this situation, as it represents how easy it is to scale up a small goal into a much larger one.

So if you don’t already have any short term savings goals in place, why not think of one or two to achieve now? It could be as simple as not spending frivolously for the next week, to see how much you can save in the process. It could be a three month goal to help you save up to pay off a credit card debt. Whatever it is, it should be something you can achieve with a little hard work, and something that will give you a good payoff.

You might be surprised how much more positive you’ll feel about saving when you can achieve short term goals such as these.

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