How to Start a Savings Account

                                                                                    

People feel powerless and helpless when they don’t have a savings or retirement account, live paycheck to paycheck or experience a financial crisis. You feel more confident, in control and powerful when you have a savings and/or retirement account - when you don’t have to worry about how you will pay for car repairs or a broken furnace.

People who do not save feel a temporary sense of power when they buy something that they believe shows they are powerful such as a “BMW”, “going on vacation to a Caribbean island or buying a designer item such as Luis Vuitton. However, these feelings erode quickly when the bill arrives – the credit card bill and they go back to feeling powerless. They also experience these feelings because they are treated differently by society. Someone living paycheck to paycheck may go to a liquor store or checking cashing place to cash their paycheck. However, if that same person when to a bank to deposit their paycheck they would have a different experience emotionally.

Nothing last forever and nothing stays the same forever. Life happens and things are constantly changing. Possessing a savings account will help you deal with changes in life much easier than applying for a payday loan because you don’t have a savings account. 

Some benefits of having a savings account are:  overdraft protection, no checking cashing fees, compound interest, cash back rewards for some debit cards, you have more payment options, money available for unexpected expenses.

Set a savings goal, reward yourself when you reach a milestone, and read your statement monthly. Here are 7 easy ways to start saving:

1. Coins.  Save loose change in a jar. The money saved can be put in a high interest online savings account such as Emigrant Direct, ING Orange Account or HSBC.
2. Use automatic deductions. Sometimes it is easier for people to save money if they can't touch it or see it. Setup paycheck deductions or setup automatic transfers to your savings account.
3. Use programs. Use bank or community programs such as: Bank of America Keep the Change, Wells Fargo Way2Save, Individual Development Accounts (IDAs), etc.
4. Online. Open an online savings account that has a higher interest rate than a traditional savings account.
5. Location. Open an account at a bank location that is outside of your work area or local neighborhood to reduce temptation of accessing the account on a regular basis.
6. Separate.  Create several separate savings accounts:  an account for unexpected emergencies, a vacation account, an account to use for home repairs if needed.
7. Contribute regularly. Contributing regularly quickly builds up your account balance and helps you take advantage of compound interest.

Are You Stealing From Yourself

                                                   

Are you a thief? If you are in debt and have no savings or retirement you are a thief and are stealing from yourself.  According to a new report by the Consumer Federation of America and the Certified Financial Planner Board of Standards, 38% of Americans are living paycheck to paycheck.  One out of every 7 Americans has 10 credit cards.  According to the Federal Reserve Bank of New York, more Americans owe money on student loans than on credit cards. 

The Consumer Financial Protection Bureau (CFPB) estimates that 30 million Americans have debt with collection agencies. 43% of Americans spend more than they earn.   According to a new University of Michigan report 1 out of 5 families owes more on credit cards, medical bills, student loans and other unsecured debt than they have in savings. 

Many Americans have no emergency fund and little or no retirement savings. According to EBRI's 2012 Retirement Confidence Survey 60% of employees state that the value of their savings and investments is less than $25,000.  Due to the recession and its after-effects many Americans were unemployed for long periods of time and exhausted their savings and retirement accounts and racked up mounds of debt.  

Each time you swipe your credit card interest is accruing on the credit card balance.  If you don’t pay the balance off at the end of the month your credit card balance will continue to grow.  Paying for an item with a credit card on average costs 110% more than the original cost of the item.  Owing credit card debt makes the credit card companies rich and makes you poor.

Many Americans are so focused on paying down debt they forget about saving money.  No matter how much debt you owe you should also contribute to a savings account. Invest in yourself by contributing to a savings account.  You should have enough in an emergency savings account that covers your total monthly expenses and bills for 9-12 months.  You should put yourself first and follow the “Pay Yourself First” principle by putting money aside towards a savings account even if it is $1 a week then pay everyone else.   

If you are living paycheck to paycheck find a way to reduce your spending such as bring your lunch to work, skip the Starbucks and bring your own coffee from home, shop at discount grocery stores and discount stores such as Aldi’s, Save-a-Lot, Wal-Mart, Target, Bottom Dollar Food, Grocery Outlet and buy store brands, use coupons. You may prefer to buy meat, dairy products and fruits and vegetables at a local farmers market or a regular grocery store. 

Buying items you cannot afford it simply stealing from yourself.  Buying a car that costs more than your annual salary, owning a home that is upside down, owing student loans with a balance of $50,000 or more is not practical and causes extreme financial hardship.  If you make sacrifices earlier in life and do research to find the best offer for a loan or credit card, contribute regularly to a savings account and educate yourself about interest rates, credit card and personal finance you will be in a better financial position.  You will have to make hard sacrifices to get yourself out of debt.  Here are 13 ways to stop stealing from your yourself.

1. Pay in full. Pay balance in full each month to avoid paying finance charges.
2. Pay bi-monthly. Pay half of the balance with 1^st paycheck of the month then pay the remaining balance with 2^nd paycheck of the month.
3. Pay weekly. Pay the minimum monthly payment the 1st week after you get the bill, and then each week pay as much as you can toward the monthly balance. Repeat this every month.
4. Pay extra. Pay as much as you can when you get the bill, and then pay more towards the bill when you get extra money.
5. Automate. Set up automatic payments from your checking account the day you receive your paycheck or the day after you receive your paycheck to pay down debt.
6. Use unexpected income. Use your income tax refund, economic stimulus check, bonus check or sell new or used items on eBay.
7. Negotiate. Negotiate for a lower interest rate, get fees waived or request a settlement to help reduce the balance owed to make it easier to pay down debt.
8. Create a budget.  Balance your checkbook and create a budget to identify what you owe, what you earn and what you spend to find areas where you can reduce spending. Pay no more than 35% of your total monthly income towards housing, pay no more than 15% towards transportation, pay no more than 10% towards debt excluding mortgage, pay 10% towards savings and pay no more than 25% towards remaining expenses to create a balanced budget.
9. Live Below Your Means.  Buy needs vs. wants; buy only the things you need, delay the things you want until you have the money to purchase the item.
10. Pay with cash. Use credit cards for emergencies only and purchase items with cash.
11. Purchases. Avoid making bad decisions such as buying rent-to-own furniture or buying a big screen television and other items that have no value. 
12. Pay on time. Avoid paying late fees whenever possible. If you know you will pay a bill late contact the company to setup payment arrangements.
13. Keep balances low. Keep credit card balances at 20% or less of the credit limit. 

NBA Players Welcome to the Real World

NBA Players make more than 90% of the U.S. population. They get to travel across the country for free by the NBA. You get paid for doing a job you love. Most Americans work a job that they hate and have no other options.

Many times players are lured into the NBA and believe that their lifestyle will last forever so they aren’t concerned with how much money they spend – but nothing lasts forever. Americans learned the hard lesson that nothing in life is guaranteed and that life can be hard.

NBA Players suffer from the Instant Gratification Syndrome, you want everything right now. You spend money that you earn in the future to buy things in the present. You have no right to complain that you can’t pay your bills. No one made you buy a multi-millionaire dollar home; spend money on partying, women, designer clothes, jewelry, and things that have no value. You made those choices.

You decided that living that lifestyle was what you wanted and more important than planning for your future. Don’t be like Chris McAlister of the Ravens.

Immigrants that were brought to this country or migrated to this country knew the value of hard work; they did whatever they had to do to make a living even if it meant making sacrifices or working multiple jobs. Americans are spoiled and have forgotten how to survive. If one option stops working, find another option.

Yes you should be treated fairly by your employer but you should always look for other options. You can use your celebrity status to create a radio show, a television show, a clothing line, a sneaker line, sunglasses, hats, become a speaker, become a board member or advisory committee member for a national company or start a business. So many options are available to you and are easier for you to attain because of your celebrity status and the people you have at your disposal.

NBA owners are denying players adequate pension plans and requesting stricter salary caps. You can’t have it both ways. You have to provide one option or other. This will continue to lead to future lockouts until owners realize they are nothing without the players. Here are 7 tips to plan for your future.

1. Save. Save. Save. Save at least 30-50% of your income each month.
2. Retirement. Sign up for the NBA Retirement Association. You only get a small amount of income but if you combine it with additional steams of income through endorsements or businesses you should be able to retire comfortably.
3. Downsize. Downsize your lifestyle. Who are you trying to impress with your ferrari, maybach, diamond watches, and millionaire dollar home. People may be fascinated by the things you have but no one really cares. When you retire what do you want people to remember about you, that you lived in a million dollar home that you couldn’t afford or that you helped your community.
4. Think About Tomorrow. You can get traded, released or hurt at any time. Plan for your future so that you don’t have to file for bankruptcy or foreclosure.
5. Role Model. Be the best person you can be and serve as a role model for youth and younger players to prevent them from making the mistakes you made.
6. Give. Donate to charities or start your own foundation. This helps to reduce your tax liability and provides greatly needed assistance to social organizations that have been affected by the recession.
7. Say No. Learn how to say no to friends, strangers, relatives who ask to borrow money or ask you to buy something. If you always lend money you only enable that person to be dependent on you forever. Show them how to earn their own money so they don’t have to ask you for money.

You determined your self-worth by the things you own instead of realizing that your self-worth comes from within. No matter how much money you have it cannot make you happy and cannot fill a void in your life.

Think how different your life would be during the lockout if you saved at least one year’s salary, if you only bought one car or if you lived in smaller house. When you experience a financial crisis, your true character is tested. You either become a winner or loser.

Determine that you will always be a winner. Don’t let anyone determine your destiny, determine your own destiny. Money can generate wealth or generate debt you make the choice.

Short Term Savings Options

In today’s market there are many options to save money. Due to the recession Americans have learned the hard way that you have to save no matter what your financial situation. There are tons or products available to save money at banks, financial institutions and online. Here are some benefits of using basic products to achieve your short financial goals if you are just starting out as a saver or have a low savings account balance.

Checking Accounts
• Can be used to create achieve financial goals if the account earns interest such as online checking accounts with ING, Emigrant Direct or HSBC
• Can transfer money between accounts with no fees and provide you quick access to your money when needed
• Can be used to achieve short-term goals such as paying down debt, saving for a vacation or doing home repairs
• Can be used to create an emergency fund with 9-12 months of monthly expenses
• Online checking accounts helps you plan in advance since most take 2-5 business days to transfer money from accounts

Savings Accounts
• Have lower interest rates which can vary
• Can be used for short-term goals or to cover unexpected expenses such as car repairs, home maintenance, etc.
• Earn higher interest than regular checking accounts but earn less interest than bonds and CD’s
• Online savings accounts such as ING Direct of HBSC have higher interest rates
• Online savings accounts helps you plan in advance since most take 2-5 business days to transfer money from accounts

Money Market Account
• Can be used as to setup an emergency fund or for short or long term goals such as saving for a down-payment for a home, purchasing a car or starting a business
• Have restrictions on how often you can access the money
• May earn higher interest rates than traditional savings accounts
• Require much higher minimum balances to avoid maintenance fees usually $2,500 and up
• Can write checks
• Interest earned by investing in the stock market so you can lose money

CDs
• Should be kept for one year or less
• Can be used to start a savings account if you don’t need to access the money for a while
• Can transfer the money later to another savings product to earn more money
• Should only be used for short-term financial goals
• Don’t lose money
• Interest rates are fixed and are higher than traditional savings accounts
• Have to keep the money until the CD matures otherwise you will pay a penalty
• Terms can range from 3 months to 5 years

Traditional Bonds
• Provide tax advantages
• Can be used for long term goals to pay for a college education
• Not the best product for saving money
• Should be used in addition to other savings products
• Interest earned may be free from federal taxes if income limits are not exceeded when the bond is cashed
• Provides a lower interest rate than other savings products
• Interest earned is exempt from state and local taxes
• Money cannot be accessed until bond matures
• Interest rates vary based on the market rate

Saving is the New 20

Being sexy can be summarized in 3 main areas: attitude, confidence and image. Attitude relates to your views on life, usually an optimistic person who can take criticism well and always remains positive. Confidence is how you feel about yourself no matter what someone else says about you or does to you. Image is the physical appearance of a person, their smile, their teeth, their hair, their walk, their laugh, their face, their body, how they dress, how they smell.

According to a study by ING 61% of the men that participated in the survey feel that women who are frugal are smart and sexy. Cash is king and having a savings account makes you more attractive and appealing. When you are in debt and have bad credit is it hard to focus on anything else and if you do, you can’t give it your all because of your financial problems especially when it comes to relationships.

When you go on dates or out with your boyfriend or girlfriend your conversations will somehow always lead to discussing your financial problems. The lack of a savings account or retirement account may cause you to stay in a relationship longer than you have to or stay at a job longer that you would like because you are living paycheck to paycheck. If you are out on a date and have financial problems you might slip up and make statements like “I wish I had someone to help me pay my bills” or “I wish I had a man to take care of me” which may be a turnoff especially on a first date.

When you start saving you see your money grow which is a great feeling. When you start paying down your debt you feel like a burden has been lifted off of your shoulders and you can begin creating long-term financial goals such as planning for retirement, starting a business or planning for your children’s college education. Saving money also helps to pay for unexpected expenses and prevents you from going into debt. Saving money and have good spending habits is an appealing quality in a mate.

If you don’t feel sexy try to make yourself more appealing by working hard to save money, fix bad credit and set financial goals. Saving is smart. Investing is smarter. Good credit is smart and sexy. Saving the environment is sexy. Saving is sexy.

America Saves Week

The non-profit organization Choose to Save states that saving is vital to a secure future and I agree. A savings account is your parachute or life vest for the unexpected. Many Americans have experienced financial crises or unexpected situations that have affected their finances which has resulted in unemployment, fights with your spouse or family, unpaid bills and mounds of debt. This week is America Saves Week where Choose to Save encourages Americans to save more money. America Saves Week began February 21, 2010 and ends on February 28, 2010.

Being disciplined to save money on a regular basis may seem like a chore but it is to your advantage to help yourself instead of having to use your credit cards, get a payday loan or sell your gold jewelry to get extra cash.

According to BEA, the personal savings rate was 4.8 percent in December 2009. Some economists believe that the personal savings will increase to 7 or 8 percent.

President Obama was pushing for a plan that would open savings accounts for 50 million Americans who currently do not have a savings account. The Automatic Individual Retirement Account would require employers who do not currently offer retirement savings to automatically enroll their employees in a government-sponsored savings plan.

Here are 7 ways to create a savings account:

1. Deal with the unexpected
2. Plan for your future
3. Go on a vacation
4. Be accountable
5. Develop good spending habits
6. Serve as a role model for your family and future generations
7. Reduce usage of credit cards

Do at least one thing this week to save money.

Visit choosetosave.org/tips/ for more tips on how to save. To become an American Saver visit americasaves.org.

Why You Should Start Saving

Many Americans don't have a savings account. According to a study by the Commerce Department Americans spend all the money they have.

Your savings account is your safety net, in case you get sick or lose your job. You can use your savings to hold you for a few months until your situation improves. Your savings account should be separate from your checking, money market or investment accounts and should only be used for emergencies such as an unexpected expense, unemployment, medical bills, etc. Some of the main reasons Americans file for bankruptcy or go into debt is due to medical bills or lack of a savings account.

A saving account should have enough money to pay your bills for at least 9 to 12 months. The money should be readily accessible and stored in a high interest account, preferably an online savings account such as Emigrant Direct, HSBC, ING or a money market account where you can make money while saving money.

Write down all your monthly bills and expenses and the amount spent for each. Calculate the total. Use this amount and multiple by 9 or 12 to determine the total amount you need to save in your savings account.

Start by contributing small amounts to your savings account until you are able to contribute more. Start off with a contribution of at least $20 a month towards your savings account. Once you are able to contribute more do so.

Once you have reached your savings account goal start developing long-term goals such as planning for retirement. A great site to learn about retirement planning is www.morningstar.com and look under the Personal Finance section. Here are 8 easy ways to save money.

1. Saving coins in a jar – the money saved can be put in a high interest online savings account such as Emigrant Direct, ING Orange Account or HSBC

2. Using coupons especially during sales - the money saved can be put into a savings account

3. Use automatic deductions – sometimes it is easier for people to save money if they can't touch it or see it

4. If you buy a cup of Starbucks coffee at $4 a day and invest in with an annual rate of 10% you could have over $500,000 in 40 years

5. Get a free checking account and save up to $144 a year

6. Get a lower interest rate on your credit cards and save up to $422 a year

7. Save up to $400 a year on eating out by going to restaurants that offer coupons or specials or inexpensive dishes

8. Selling or donating unused items (clothes, shoes, toys, coats, purses, etc.) can save up to $1,000 a year

A Spending Plan - Your Key to Making It in 2008

Many times when someone mentions a spending plan or budget people get nervous and run and hide. A spending plan is an essential component is getting out of debt and achieving many financial goals such as: start a savings account, paying for your children's college education, planning for retirement, planning for a family vacation, starting a business and more. Many economic experts state that we are in or almost in a recession. It is more important now in 2008 than ever to properly manage your finances and ensure you have an emergency fund to make it through these tough times.

A spending plan is simply a recording or documented list of all of your monthly expenses and monthly income. Once you record all of your spending for the month you can readily see what areas need to be addressed. A good guide for monitoring your monthly spending plan is as follows:

1. 35% of your monthly net income should be spent on housing (includes bills)
2. 10% of your monthly net income should go towards savings
3. 15% of your monthly net income should go towards transportation
4. 15% of your monthly net income should account for debt
5. 25% of your monthly net income should go towards other expenses

You can create your spending plan manually using pen and paper, a spreadsheet or using a software tool such as Quicken or Microsoft Money. Whatever method you use stick to it and use it every month.

Another component to making it through 2008 is to create an emergency fund or savings account. A savings account is not an investment account. A savings account is money that is available in the event an unexpected expense occurs. This will prevent you from using a credit card and will reduce stress that can be caused by having financial problems. In addition making a habit of saving money pays off in the long run because you will have money to buy things that you need and want without having to get a payday loan, cash advance or buying rent-to-own items.

A great way to save money without thinking about it is to deposit money directly into a savings account through your bank. This can be done by contacting the bank where you have direct deposit and request an additional amount of money be deposited into a bank savings account.

They are several vehicles that can help you save money such as: savings accounts, online accounts, money market accounts, money market funds and certificate of deposits (CDs). Do research and comparison shop for the bank that provides the best options for your savings goals.

Another component to making it in 2008 is to create financial goals. Your financial goals provide accountability and direction for your savings and how the money will be used. You can create short-term and long-term savings goals. A short-term goal can be to save $100 a month. A long-term goal can be to get out of debt. Whatever your goals stay focused on them and set a deadline date for each goal to help you stay on track with your spending plan.

Using the three components identified: creating a spending plan, creating financial goals, and creating a savings account will help you make it through 2008 with less stress and more financial security.