Archive for the ‘Saving’ Category.

Paying for my 2014 Vegas vacation with my 2013 piggy bank savings

2014-piggy-bank-savings

Using a piggy bank and with little to no effort, we saved enough money to help pay for a summer vacation in Vegas.

2013 is now behind us. Time to focus on 2014. Financially speaking, one of the basic and first things you should do is have a piggy bank. This is in addition to your regular bank saving account.

You don’t take piggy banks seriously or think they are only for kids? think again!

Personally, piggy banks have been a great source of saving. They have helped me save and pay for some big purchases in the last few years, including major dental bills, vacations, car down payments, pay down debt and more.

My latest piggy bank was born on January 1, 2013 and was retired on new year’s eve (Dec 31, 2013) Me and the wife put our spare change as well as some bills there, on a daily and weekly basis. We made it a habit to always put something, regardless of how small. The point was to be consistent with it. We also made sure that this was our second saving source and not the major one. It is a supplement to our major bank savings.

When it was all said and done, our 2013 piggy bank had enough money to pay almost 70% of the total for our summer 2014 Vegas vacation. How nice and simple is that! We saved for a great vacation (flight and hotel accommodation) with almost no effort. We didn’t have to shed any sweat to save this piggy bank money.

For 2014, we have already started our new piggy bank. It is clearly labeled ‘2014 savings’ and will most likely be used to book another vacation in 2015.  Easy and effortless way to save for a vacation or major purchase.

One of the five principles of good finance and budgeting that we preach about here on BudgetSense.ca is how ‘every bit helps’ and a piggy bank may sound like small effort but with enough time, you can save enough money to go a long way.

Go to your local Dollar Store and pick a piggy bank right away and get started while it is still early in the year.

How roaming the streets of Athens in my teen years taught me valuable entrepreneurial and financial lessons

One of my fascinations since childhood has always been radios. Specifically AM and SW radio.  Having just arrived in Athens,

Collecting calling cards in my teen years helped me buy my SONY SW Radio

Greece in the mid 90s and in my early teens, I was without a radio. I needed one badly. But I was only 14 and with no job, and wasn’t about to ask my family for money to buy something as inessential as a radio. Well at least not important to them. So I took it upon myself to save money and buy one of my favorite radios: a SONY SW Receiver. But at the time, this cost close to $100, a fortune back then. I was still too young and a year away from finding my first job in Athens. So I had to come up with a new way to get the money.

At the time, and prior to the introduction of cellphones in Greece and Europe in general, calling cards were very popular, even for local calls. You would get a calling card with a certain amount of money and that enabled you to use it for a certain amount of time. Very convenient and affordable for most people. Beside their convenience, these cards had a another appeal to them: each had a theme or image of a certain city, place, team, person etc. Needless to say, there was a whole market of collectors, ready to buy and sell these phone cards (after their minutes had been used of course)

At first, I started seeing them in phone booths, left behind once people were finished using them. A few of the people who used them would end up collecting them but the majority would leave them behind. This is where I saw an opportunity I could capitalize on: collect enough of those calling cards and sell them for a profit to be able to buy a radio.

It took me a few months and at the end of it, I found more calling cards than I had imagined I would. It felt like a treasure hunt. When I went to the collector’s corner in downtown Athens, I had more than a few collectors gathering around me, trying to give me the best value for my cards, seeing that I had a lot and of different varieties. I managed to get the best deal which was more than enough to buy my radio and even had some money left to save for other things.

This is one of the best life experiences I have ever had. It taught me to rely on myself and work hard for what I want. It taught me that there is a way to do things if I try hard enough. After all, I managed to save money without having a job or getting money from anyone. All I needed was the right idea, some walking and free time, all of which I had back then.

ING makes saving money cool and interesting

I have been using ING bank to save money since 2008 and it is one of the biggest reasons to which I attribute my increasing interest (pun intended) in saving money.

There are a lot of places you can go to open a saving account but ING is different. Different for three reasons: higher interest rates, ease of use and last but not least, their success in making saving money a cool thing. And this last point is what I would like to focus on here.

We all know that saving money is and never was a fun or cool thing to do. It is all about shopping and spending money to buy anything and everything we desire and want. With ING saving has suddenly become cool, while spending money, not so much. This re-engineering and re-branding of the way we think about money has helped ING become synonymous with saving money and investing for the future.

As part of their effort to make saving cool and fun, they have taken full advantage of the explosive popularity of social media. This has helped it get to even more people, especially young people, and turn them into savers as well.  Their website is also ease to use and have taken the complexity out of transferring money from your regular bank. The site has lots of tools to help you with your saving. For example, you can set an automated schedule to transfer money from your bank to your ING saving account.

If you are having trouble saving money and have been a chronic shopaholic, give ING a try. It may mean the difference between renting for life or having your own house in a few years.

p.s: Full disclosure: the author of this blog, as has already been mentioned, is an ING user. If you would like to open a new account, we would appreciate you mentioning us as a referrer and we will both get a bonus referral fee of $25!  Just mention our referral code “17109393S1”

How To Create the Right Emergency Fund

How To Create the Right Emergency Fund

By: guest author ‘Alicia Sanders

Unfortunately, we live in complicated financial times when lots of consumers complain that they don’t have an opportunity for

An emergency fund is for everyone and not only the poor

saving money because their budget is really tough. Many Canadian consumers don’t have any savings and that’s why when an unexpected financial problem arises they need to borrow cash to fix it. We plan our expenses and try to foresee different situations, but life is unpredictable and anything can happen. And that’s why it’s so important to protect yourself from unpleasant surprises and create an emergency fund. These savings will be your helping hand in case of financial emergency and there will be no need to apply to people you know or different lending institutions and ask for financial help. Creation of an emergency fund is a first step on your way to a personal financial independence and it’s very important to make this step wisely.

Define How Much You Need To Save

Do you know what can be called a perfect emergency fund? It’s in case your savings are enough to cover your expenses during 3 months. Make some math and count how much money you need to cover your monthly expenses including regular bills, mortgage or rent payments, food, health insurance and other personal expenses. Then multiply this sum for three and that will be a minimum for your emergency fund. Estimate your financial situation and risks of losing a job or other possible troubles and try to define how much you need to feel more comfortable. In case you have enough then you feel calm and can sleep well at night because you’re confident in your ability to fix possible financial problems.

Choose The Right Place For Your Money

It’s completely up to you where to put your savings. But of course, it’s better to put money in a place where it can make some interest so it will bring you an additional profit. You can open a savings account in a bank and it will make your savings work for you. But on the other hand, today’s economic situation is highly unstable and you never know if you can trust to one of another financial institution. So you should choose a place where your money will be absolutely safe. It will be better if this place won’t be easily available for you because there’s a risk that you will try to use some cash until there will appear an important reason for that.

Access Your Savings Only in Emergency

The main goal of the emergency fund is to protect your well-being in completely unexpected situations. Nowadays it’s popular to apply for unsecured loans from places like NorthenLoans.ca or other lending companies in case there’s a need for fast financial assistance, but if you have savings you can easily avoid borrowing and making financial commitments. Remember that and don’t touch your savings unless there’s a real emergency. Also it’s important to understand that emergency isn’t just another casual problem which may arise any day. That’s why it’s important to cherish your efforts and not forget about your real goals.

It is January 1st, 2012: Get started with Saving NOW!

Happy New Year!

Having cleared that out of the way and all the celebrations that come with a new year, let us get down to business. Yes, right here and now, on January 1st. We don’t have much time to waste. Not even having an extra day from this being a leap year is an excuse to waste any time getting serious.

So what am I calling for you to do? to start saving. Yes, start right now. It doesn’t matter if you are already saving, you can still do more to make this an even more serious plan. Being January 1st, you have a huge advantage. You are basically starting from zero and not missing on any day. In about one year from now, and as this year will be coming to an end-assuming the world doesn’t end on Dec 21, damned be the Mayans for their ambiguous calendar!-you will look back and be so thankful that you started saving from day 1.

Ok, so if you already are saving, go ahead and deposit something into your account today. I don’t care how much, as long as you deposit something. Minimum of 5 to 10 dollars. This is necessary as it signals to your brain that you intend to keep doing this for this year and on a consistent basis.

And if you are not a saver yet, get started now. Call your bank and schedule an appointment to open a saving account. If you prefer, and I highly recommend it, you may want to open a high-interest savings account with ING (you can get a referral bonus if you mention that you were referred by us: Ref# 17109393S1) , Ally or other online banks. Look in your wallet and see if you have any excess money and set it aside to be deposited into your new saving account.

And finally, for both those who are already saving or not, I recommend having a good old-fashion piggy bank where you will throw in all your coins-big or small-as well as some occasional small bills. Although your main saving account will be your one and primary saving source, this one will simply supplement it for an extra future income. The idea behind a piggy bank is that it will force you to save small change that you would otherwise end up spending on things you probably don’t need. It will also keep you more focused and committed to saving money.

If you have been following the news lately, you will have noticed that 2012 will be a tough year for economies worldwide, with no exception. It is the year of the unknown, one that is hard to predict. All of which means that you have to keep a tighter grip on your wallet and hard-earned money,  and to save rather than spend them.

And hey, it is not too late to have resolution for 2012: to save money and be serious about it through Dec 31st!

Want to make that big purchase so bad? Then start planning last year!

Like  everyone else, I occasionally see something I really like and want to get it that moment. Problem is, it may not be anything I can easily afford. It could be something big, say a nice car, a new electronic gadget, computer etc.

Call it ‘instant gratification on steroids!’

Unless I have a lot of money saved, and I can spare some of it for this big purchase, I won’t be able to afford it.

Which is why you should always start saving early, so that you are able to afford things you want with ease. Remember, or if you haven’t already read it, one of our ‘5 Principles of successful budgeting and finances’ is to be patient and have discipline. In this case, if you start early enough, your patience will pay off at the end by being able to afford that big purchase.

I can’t stress enough how how important it is to start early and give yourself a good head start. The earlier you start the more ready you will be to make these big purchases. Moreover, by allowing yourself enough time to save for big things, you will not only be able to afford them, you will have spare money leftover for other purchases or emergencies.  And last but not least, by starting early, your stretching your timeline which allows you save comfortably without making big sacrifices, compared to having a shorter timeline.

When it comes to incorporating it into your budget, saving for big purchases should have its own allocation and not to be mixed with all your general saving. Otherwise, what are you saving for: a rainy day, a big purchase or both? so it is important to separate the two saving goals.

If you didn’t start saving for a big future purchase yesterday, last month or last year, no problem. You can start today, and by this time next year, today will have been long in the past and enough time for you to have saved your money.

But saving doesn’t and shouldn’t stop. The idea is to keep saving, all the time, because your needs and wants will always be there. In a few years, you will want to replace your car. In a year from now, you may want to buy a new version of your favorite smart phone. And in a few months from now, you may want to take a vacation to a hot destination.  The list doesn’t end and therefore our saving should always be active!

Failure to save for big purchases in advance-months or even years in advance- will mean you will either have to resort to using credit cards and other financial means where you will have to pay it back with interest, or not be able to afford your purchase at all.

Tip: you can either create a new item in your budget for these big future purchases or just include it as a sub category in your existing ‘savings’ allocation.

Don’t be Stupid and Pay the Full Price!

Inflation? what inflation?

It is mind-boggling that I still see people paying the full price on things like electronics, cars, clothing, books and lots more. And in some cases, not only do people pay full price, they pay premium. These people could have easily saved lots of money if they took the effort and looked around.  With so much competition from businesses for your money these days-with the exceptions of things like gas, electricity-you shouldn’t pay full price for anything!

These days, you can find savings and discounts everywhere you look. Whether it is electronics, books, clothing, food, savings are everywhere.  The first and best place to find them is online. Let us go through some of the channels where you can find savings and discounts on the items you are thinking of buying:

Weekly flyers: where I live, we get a bag full of flyers for more than 10 different stores, every Thursday evening.   I and my family make full use of these flyers. On average they save us $25-100 every week in grocery and other shopping. These flyers include food, electronics, hardware, auto parts and other general purpose stores.   If you get these flyers where you live, make full use of them and go through them. Chances are, you may find something you like, want or need on sale. Not checking these flyers before going grocery shopping is like blind shopping.  If these flyers are not delivered to you, no worries, you can simply find them all on flyerland.ca .

-Group Buying websites: websites like Groupon, DealFind, Canadian  TeamBuy and others, have made it easy for people to find a different deal on a different item everyday.  These companies look for businesses such as restaurants or beauty salons that are willing to give special deals and discounts to consumers. The group buying websites then feature one of these special offers from different companies on their website everyday.  Most of them make it easy and email you the offer as it opens.  Sign up with one of these sites and try them out for a few weeks. You may get offers that are of special interest to you and end up saving you lots of money.

Online auction and merchant sites: whether it is Ebay, Kijiji, Craigslist, or others, the competition for your money is massive and that can only mean more savings for you.  Using these websites, you can find new or used items, with the latter saving you lots of money, sometimes more than half of what you would pay for a brand new version of the same item. Other websites like Amazon have pioneered the selling of books and electronics at very affordable prices, usually a lot less than what you would pay for at regular stores.

Sign up for special store email offers: if you have a favorite store or brand, head up to their website and sign up for their special offers mailing list.  If you are not in a rush to buy a certain item from your favorite store, simply wait for the right time and offer before making your purchase.  Two summers ago, I was searching for a certain part for my car, but there was no urgency to get it right away. Being a recipient of special discounts from a local auto parts store, I finally got an email where the product I was looking for was discounted by about 40%, and that is when I made my purchase and saved a lot!

Twitter and Social Networking: Twitter is all the rage now, and it is a great place to find discounts on literally thousands of items.  Simply search for the product you are interested in, and chance are, you will find lots of results.  Twitter is quiet effective given its use of real time results, so the discounts and offers you find, are as up-to-date as possible. For more information about using Twitter to save money, visit our article here.

Special Community Forums: these days, it is all about the power of community and people coming together and sharing what special deals and offers they have come across.  In Canada, RedFlagDeals.com is a perfect example.  As you visit these websites more and more, you will find new discounts and offers on things that you may have never been aware of. You are taking advantage of the collective leveraging of a big community’s coming together and sharing money saving ideas.

Haggle and Shop Around: yes, you have heard this before. But there is a slight difference in what we mean. Let me explain.  We are still in tough economic times and are not out of the woods yet. This means companies are desperate to keep business going, by selling as much as they can. This often means lowering their prices to keep demand high. This all works in your favor. Look at prices for electronics, cars, books and clothing around you. Most of it have gone down in the last two years. Of course, it is not just the economy, other things like the high Canadian dollar is another factor working in Canadians’ favor.  The point is, businesses are still looking to keep afloat and survive the downturn, and they will do anything to sell products and services.  And as mentioned earlier, the competition from different sources is stronger than ever before.

More options means more savings: the availability of more than one place to buy what you want means more competition for your money. A perfect example is ‘travel packages’ You have at least 10 discount travel websites to choose from, not to mention all the other ‘last minute deals’ sites. With more options available to travelers than ever before, I don’t know why would anyone pay the full price or go with the first package they find.

The days of buying something from the first look are long gone. People should take full advantage of all the tools and channels outlined above to find special discounts and savings on the products they are thinking of buying. Doing your research will put lots of money back into your pocket.

Minimize your Expenses, Maximize your Earnings

The eventual objective of your budget is to have leftover money, after you have accounted for everything else. That is, you need to make sure that you are maximizing your income and minimizing your expenses. How? let us find out:

 

-Minimizing your Expenses

  • Review your budget first: go over every item, line by line, and see which ones can afford some reductions.
  • Find a better and cheaper insurance. This could save you hundreds of dollars a year. Better yet, if possible, bundle your home and auto insurance to maximize your savings.
  • Cancel any entertainment or media packages you don’t need. Do you need your TV cable as well as a Netflix plan at the same time? Or, do you need two cell phone plans?
  • Driving less or even commuting to work with others will save you money on gas.

-Maximizing your Income

  • Sell something online: do you have any items, books, electronics sitting around that you could sell? list them on Ebay, Craigslist and you may be surprised to see how many people will express their interest in buying them.
  • Working in a PT job: if you have a lot of free time, why not look for a PT job, one or two days a week?This will certainly maximize your earnings.

These were just some examples you can follow to minimize expenses and maximizing your revenues. You may think this is all common sense, and it sure is, but you may not be applying it to your life already. You need a reminder or to read about it before being able to actually applying it to your situation.

The more you maximize your earnings and minimize your expenses, the more money you will have left in your budget for you to enjoy and save. So it is worth taking the time to review your budget and finding areas to tackle for savings or reductions.

Although there are lots of variables to account for, and life changes can be unpredictable, your budget of the future should have a positive net income. In other words, as you move forward, your expenses should be brought under control and reduced, while your earnings are maximized. With some planning, you can reach this ideal situation.

How your loose change can pay for big purchases!

I used change money to pay the down-payment on my dental treatment. That is right, I used nickels, dimes, quarters, loonies and toonies that I had saved in a piggy bank to pay more than $800 towards the total cost of getting braces for my teeth. And it took me less than 18 month to save this money.

The best thing about it all, it didn’t even feel like saving money. I was simply putting away loose change that I didn’t need.

Although this was my first experience of using change money to pay for a large purchase, other even bigger ones were done later on. So how can such small amounts of money lead to enough savings for a big purchase? Using my own long experimentation with this type of saving, here are some ways where you can save enough coins to buy some of the things in your wish list.

-Decide where you will collect and save your change: a piggy bank comes to mind, and while it doesn’t have to look like a pig, it is important that the jar you use is closed and has no way of opening it, unless you break it. You don’t want to make it easy for yourself to open your little bank, the next time you desperately need change for a coffee.

-What are you saving for? you have to decide what you are saving for. Is it a down-payment on a used car? New computer? Getaway vacation? Once you decide what you are saving your change money for, print a little sticky tag with what you are saving for and stick it on your piggy bank jar. This helps, according to our 3rd principle of budgeting and finance, to keep you focused on a clear goal.

-Target date: while it is not a must to have a target date to reach your savings goal, in certain situations you will have to specify one. For example, if you are saving for an August car show in California, then you have a clear target date to abide by. A specific target date together with a clear objective for the saving (see note directly above) will help you stay more focused.

-Where to place your ‘loose change’ bank? This is extremely important. Based on my personal experience, the car has proved to be the best place to keep my piggy bank. Why? It is so within reach to deposit all your leftover and unneeded change from any purchase. Of course, you will have to hide it from clear view for safety reasons. If you are uncomfortable leaving it in a car or don’t even have a car, next best place is somewhere that is within the view of everyone at home. This will help make it easy to reach, so you can deposit your change in it when you come back home. Occasionally your family members may (hopefully) deposit their unneeded change there too.

Although I used a piggy bank jar to save my loose change money, occasionally I would deposit small bills too. This can speed-track your savings.

Putting your loose change away in a bank has an additional benefit to your health as well. Like we noted in another article, as your wealth and health are closely related, saving your change will help you avoid spending it on junk food or high caloric beverages.

Last, you shouldn’t use a piggy bank to replace your real bank savings. The two are completely independent and this second one is more of a complimentary (not a substitute) for your real savings in a real bank.

In accordance with our 1st principle of budgeting and finance, ‘every bit helps’ and diversifying your means of savings, even through change money, will go a long way towards achieving your financial goals.

Diversifying your Sourcesof Savings will Maximize your Future Wealth

Putting your money in a savings account is not the only way to save and grow your money. It is just one of many. Generally speaking, and based on my own personal experience, the more sources of savings you have, the more money you can save. In other words, don’t put all your eggs in one basket. Find alternative ways to save money. Here are some of them, most of which I have tried myself:

-High interest savings account: whether it is at ING, Ally or your local bank, this is a must for all people looking to save their money. Don’t worry about interest rates being at historical lows. They are going up and will continue to. You are not just putting your money there to gain interest. You are also leaving it there so that it is not within your reach, where you could end up spending it.

-Piggy Bank: we already went in-depth about how to save money using a piggy bank.  Where your savings account will hold big amounts, use this one to save your loose change (and some small bills occasionally)

-Automatic Payroll Deduction: This is one of my favorite and easiest ways to save. You don’t even see the money and it goes straight to your saving account.

-RRSP: for Canadians, it is highly recommended that they open an RRSP account to compliment their existing savings account. You can use automatic payroll deduction at your company (see note above) to take advantage of this.

Of course, you can choose to go more advanced and start investing your money, buying stocks, currency etc. but that is beyond the scope of this blog for the time being.

Having more than one place to save your money will not only get you more money, it will just give you a feeling of having more money, and this in turn will encourage you to want to save more money.