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People are giving us advice on saving money everywhere we turn these days - but I know I can use it so I try to listen. Some recent tips on slashing costs on big ticket expenses caught my eye and some of them sound practical and doable:

• Raise your deductible on your household insurance to reduce your premium, and ask your insurer for a discount if you have multiple policies with them.
• Make sure your automobile insurance premium is lowered for every safety feature your car has (air bags or anti-theft devices, for example) - if in doubt, ask.
• Grocery shop more carefully, and to a menu, so you don’t waste food - experts estimate that we throw away a quarter of what we buy - that’s expensive!
• Delete premium channels from your cable TV package and cancel unnecessary (and often expensive) extra options on your cell phone.
• Buy children’s clothes from sales racks or second-hand, especially considering they’re going to grow out of it soon.
• Check all the different ways you can reduce your energy use so that your utility bills can fall - like sealing up leaks and lowering the temperature on your hot water system.
• Use coupons to get cheaper entertainment options (two meals for one, or cheaper movie tickets) and consider staying in with a DVD and a pizza just as good as going out to the cinema.

The impact of the economic crisis on our kids is an important issue; but as well as explaining the situation carefully to children, it’s also essential to realize that they will have probably figured out a lot of what’s going on before you get around to telling them. Don’t forget that when you were a child, you understood a lot more of what was happening around you than your parents thought - well, these days kids are just as smart. (more…)

Everyone knows a recession is likely to bring more unemployment so if you’re feeling nervous about whether you’ll keep your job through 2009, you’re definitely not the only one. Money Magazine says that economists are predicting a rise in the unemployment rate to around 7 or 8 per cent during 2009, which means that there are certainly a few jobs that will be lost. (more…)

Are you finding it difficult to save money? In this case you need to change the way that you approach saving. There is more than one way to save, and it is up to you to decide what will work best for your financial situation.

Below are four ways to change (and better) the way you save:

1. Save first, put money elsewhere second. This is a great way to ensure that you are saving money each month. Even if things are tight you should always put money away to save before tackling other expenses and miscellaneous items. This will force you to cut out expenses that are not as important.

2. Automate the saving process. You can do this by having a certain percentage of money taken out of each paycheck. This is a way of “paying yourself first” that has been proven effective over the years. If you don’t see the money you can’t spend the money.

3. Open an online savings account that offers an above average return on your money. Many online banks offer interest rates of three percent or better. This is much better than any rate you would find at a local bank.

4. Utilize all of your options. There are many investment vehicles including savings accounts, CDs, the stock market, etc. Where you put your money is up to you. You will find that some options are less risky than others, and some offer more chance for a big return.

The four tips above should allow you to save more money on a regular basis. If what you are doing right now isn’t working, consider using one or all of these tips to get on track.

photo credit: wilhei55

photo credit: fabbio
If you want to have friends around to celebrate some special occasion but feel that you just can’t afford to throw a party right now, then maybe you just need to re-think what this party is going to look like. There are definitely ways you can still enjoy a fun party but not spend so much, and especially in economic times like these, no guest is going to complain. (more…)

Most of us would think that getting a new job - especially if it’s one that pays more - is all good news, and we’d just be waiting for the start date. But the more financially aware would think that there are still some important things to plan ahead when you’re about to have a change of job. Some of these include:

• Consider which benefits might be better with your current employer than with your next one, and take advantage of it. For example, if your health insurer is different you may find it worthwhile to get new spectacles before you leave your current employer; or if you need some dental work and your next employer offers a better health package then postpone it if you can.
• Look at the vesting schedule of your pension plan with your current employer. If the date you will be fully vested is occurring soon, it can get you a lot of extra pension savings by staying with your current employer until that date, which far outweigh the extra income you would get by moving to the new job sooner.
• Think about the tax liability in your new job. If it will push you into a higher tax bracket you might want to make early tax deductions so that you don’t feel the effect so hard.

More and more people are turning to online banks, such as HSBC, when opening a savings account. Online savings accounts often times offer a higher interest rate than those of local branches. That being said, you need to make a decision on how much money you are going to keep in your online bank. Obviously, there are many details that will go into making this decision.

Before you do anything make sure the bank is FDIC insured. This way you don’t have to worry about losing money if the bank goes under; which is becoming increasingly more common in today’s day and age.

How can you transfer money to and from your account, and how long will this take? Most people use an online savings account to save. In other words, they don’t use this type of account to pay bills. This is due in large part to how long it can take for funds to be transferred from one account to the next.

There is nothing wrong with saving a lot of money in an account with an online bank. But as noted above, you want to make sure that you don’t go over the FDIC limit. Right now, the limit is $250,000, but this is set to drop back to $100k at the end of 2009.

Thanks to above average interest rates keeping your money in a savings account at an online bank is a great idea. Just make sure you know the pros and cons, as well as why you are using this type of account, before you get started.

It’s a pretty rare case to find a home owner who doesn’t have insurance for their home - but it’s not rare at all to find people who don’t really know what their home insurance actually covers, and I’m afraid to admit that I’m one of them. I signed up for a standard home insurance policy but don’t know for sure what is and isn’t included on that - for example, if my home was flooded I don’t know if it would be covered adequately.

It seems obvious to hear but checking your home owners’ insurance is sufficient and appropriate is something many of us need to do. Your home is likely to be the most expensive thing you own, so making sure it is covered in the case of an accident or emergency is really important.

In the United States, for example, many basic home insurance policies do NOT cover events like flooding and water damage, earthquakes and power failure, unless you specifically ask for the cover and pay an additional premium. You should check what your policy covers, and even more important, what it doesn’t, and consider the likely risk of these events happening in your area or to your home. Check the costs for additional insurance and make an informed decision about exactly what your insurance covers and at what cost. Paying a slightly higher premium, or even just being aware of what is and isn’t covered, is a whole lot better than discovering in the middle of a crisis that your insurance doesn’t cover what you thought it did.

Want to be one of those people who successfully become debt free? There is plenty of advice on how to do that around, but less on a realistic approach to the hurdles you might find on the way - but if you can expect some of these phases to occur during your experience of becoming free of debt, you might have a much better chance of making it to your goal:

• You’ll probably start out with some enthusiasm and see some obvious ways you can save money, and actually enjoy that at first; you will start to see your debt balances shrinking.
• Chances are high that somewhere along this track, some emergency will happen that requires you to dig back into these precious savings. This will be frustrating, but you should remember that you always need to have some financial contigency for unexpected situations like illness or economic hiccups.
• About this time, you might find it hard to have the same motivation to save money and eliminate your debt that you started out with. This is the point where some people give up and return to their old habits. Recognize this and try to stick to your goals, reminding yourself of why being debt free is important to you.
• Things will get better - and once you can see that you are really close to eliminating your debt, full enthusiasm will return and you’ll get there. And then you just have to remember everything that you have learned along the way and make sure you don’t fall back into any bad financial habits.

While most people (quite logically) wait until January 1 to make their New Year Resolutions, perhaps there’s a very good case for making your financial resolutions a bit earlier - like now!

The time between early November and the end of December is often an expensive one with the holiday season and the dangers of spending extra on your credit card - especially, for example, to buy Christmas gifts - with the good intention of paying it all off in January. But if you are wise enough to start making your new financial resolutions now, you might be able to start the year off on a much more positive note.

First of all, don’t buy expensive gifts over the holiday season just to “keep up” with other people. If your family and friends knew that you would be putting yourself into more debt to be able to give them a gift, they would rather not receive the gift - and if they don’t think this way, they don’t deserve a gift. There are also plenty of creative ways to come up with cheaper but still thoughtful gift ideas.

And secondly, don’t relax too much into the spirit of the holiday season, Thanksgiving included, by spending more because it’s a “special occasion”. You can make it more special by sticking to your budget, not using your credit card if you don’t have the cash to back it up, and remembering that come January or February, you’ll still be feeling happier compared to the distress you might feel if you spend too much now and have the bills roll in early in 2009.

photo credit: Joe Lanman