Here's Why You Need to Save

Are you saver? Don’t feel bad. Many Americans today don't have a savings account.  I have been a saver for years but it takes practice and discipline.  Your savings account is your safety net if case you get sick or lose your job you can use your savings to hold you for a few months until you can find a new job.

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

You can start by contributing small amounts to until you are able to contribute more even if it is just $5 a week.  Once you are able to contribute more do so.  Make several short-term goals. 

Once you have reached your first goal start developing some long-term goals such as planning for retirement or paying for your children’s college education.  A great site to learn about saving is  americasves.org.

A savings account will ensure that you are on the road to becoming financially secure and will prevent you from going into debt when an unexpected expense arises.  You may not know what the future holds but if you prepare your finances now, it will ease the burden of what tomorrow holds.  Here are 17 tips to save money.

1. Pack your lunch for work every day.  Buy drinks from the grocery store and skip the Starbucks.
2. Reduce spending by 30-50%.
3. Use direct deposit to send your paycheck directly to your bank.
4. If you get a raise, save most of the money received from the raise or use a portion of it to pay down debt.
5. Buy what you can on sale, use coupons or shop at a wholesale store such as Sam’s Club or Costco.
6. Buy whole foods, such as vegetables, grains, beans and fruits, instead of processed foods.
7. Check your local health food store or farmer’s market to buy grains, seeds, nuts, spices and legumes, in bulk.
8. Carpool or use public transportation.
9. Cancel your cable service or cell phone service or get the cheapest plan possible.
10. Use your cell phone to make long distance calls.
11. Shop around with various banks to find a checking account with no monthly fees.
12. Downgrade or downsize, buy a cheaper car or move into a smaller home.
13. Buy energy efficient appliances, ceiling fans, programmable thermostats, fluorescent light bulbs and lamps, or hot water insulator jackets.
14. Donate items not being used to a charity and write off on your taxes.
15. Rent movies instead of going to the movie theater.
16. Turn the lights out when you are not in a room for 20 minutes or more.
17. Turn the heat and/or air conditioner off when you are not at home or set at a low energy saving temperature.

Finances - Women vs. Men

Results from the FINRA Investor Education National Financial Capability Study revealed that women with low levels of financial literacy knowledge were more likely to engage in bad credit card behaviors such as incurring late fees than men with low levels of financial literacy knowledge.  

However, there were no differences in behavior between men and women with high financial literacy knowledge. Increasing financial literacy knowledge can improve credit card management and reduce or eliminate gender based differences in credit card behavior.

Financial literacy is linked to retirement planning, investing, quick cash methods such as payday loans or cash advances, and generating wealth. A vast understanding of financial literacy improves credit card behavior for men and women.

Women were more likely to carry a balance, pay the minimum payment on their credit cards and be charged a late fee.  Women were less likely to pay their credit card balance in full each month and comparison shop for credit cards.

Women trail behind in finances and usually have low confidence when trying to set and obtain financial goals.  Many women shy away from finances and don’t view managing their finances as a high priority.  Many women focus more on their appearance and spend their money on shopping or entertainment.  Women put other’s needs first and focus on other priorities such as their children, college funding, etc.  However, women must put their needs first especially regarding finances.

The difference in how women view money may be related to how parents and educators teach girls about money.  These girls grow up and continue to use the same lessons they learned about money as a child.  Women are more emotional when it comes to spending.  Women like to spend money on things with little to no value like makeup, clothes, purses, shoes, etc. 

Many women are taught to find a husband who will take care of them which may prevent them from learning about the various aspects of financial literacy such as budgeting, investing, savings, debt management and retirement planning. Many women feel they don’t need to learn about finances because their husband will manage the finances. 

Women have to change the way the think about money and set an example for their daughters and future generations of girls.  If you want to own a home, go on vacations and live a certain lifestyle you have to save, invest and make good financial decisions.

Many women are forced into different roles when a life-changing event occurs.  Many women find themselves unemployed, divorced or widows and didn’t know how to manage their finances.  This can lead to making bad financial decisions based on emotion and mistakes that may take years to recover from.

According to the Prudential and Hearts & Wallets study women feel less confident than men in their understanding of financial products, their ability to make financial decisions and their perception of their current economic standing.

The financial services industry caters to men in the way it presents and discusses information and products.  Women don’t make quick decisions regarding finances and are concerned with long-term results.  Women are not proactive about learning how to manage their finances and take it for granted that they won’t need to learn because their husbands will do it for them.  

Women earn less than men but have longer retirements due to the fact that women live an average of five years longer than men. Women have higher health care costs throughout their lives.  Women should be saving more than men and investing their savings more aggressively to get a strong long-term return that will grow their portfolios.

Women who don’t manage their finances properly directly affect men. If your wife or girlfriend always asks you for money or needs help with her bills, if you provide financial support to your mother because she has little to no savings or retirement or your daughter keeps borrowing money because she can’t pay her bills - this is a direct result not properly manage their finances and lack adequate financial literacy knowledge.

Men are self-directed learners and use the Internet to find out information more than women.  Women tend to rely more on personal networks with friends, family and financial planners, and they take a networking approach to gathering information or get validation. Men and women need to have a strong grasp financial literacy knowledge to help them make sound financial decisions that will improve their lives. 

Why You Need an Unexpected Fund

Many Americans today don't have an emergency fund or unexpected fund. If you don’t have a savings account you will have to use a credit card or get a payday loan to pay any unexpected expenses.

Your emergency fund is your safety net, in case you get sick or lose your job you can use your emergency savings to hold you for a few months until you can find a new job or to help get over a financial crisis. Your emergency account should be separate from your checking or savings accounts and should only be used for emergencies such as an unexpected expense, unemployment, reduction in pay, sickness, major car or home repairs, medical bills, etc.

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

To determine how much money is needed to pay 9 to 12 months worth of your bills do an inventory and write down all your bills and expenses and the monthly 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 emergency fund.

You can start off by contributing small amounts to your emergency fund until you are able to contribute more. Start off with a contribution of at least $20 a month to your emergency fund. Once you are able to contribute more to the fund do so.

Once you have reached your emergency fund goal start developing some long-term savings goals such as purchasing a home, paying for your children’s college education, starting a business or planning for retirement. A great site to learn about retirement planning is www.morningstar.com and click on the Investing Classroom link morningstar.com/Cover/Classroom.html.

There are many organizations that provide emergency services for people such as the American Red Cross Emergency Assistance, Salvation Army Emergency Assistance Program and the United Way. The utility companies provide funds for people in need. These funds can be used to pay basic necessities and any other bills.

Reduce Spending for Holiday Meals

During the holidays it is so easy to spend money with all the advertisers, family and friends asking you to buy this or buy that. Resist the temptation to spend money that you don’t have, buy more than you need, or buy something you probably will not use simply because it is on sale. Many times items that are on sale are not really a bargain. Do comparison shopping to see if you can find the item for a cheaper price at another store or online. Here are 9 ways to save money shopping for meals this holiday season:

1. Plan ahead. Don't wait until the day before the holiday to go shopping. Lines at the register are longer and the selection of items is limited. Try shopping at least a week in advance or early in the morning.
2. Menu. Create a menu ahead of time and stick to it. Consider low cost items for the menu such as potato salad, salads, sweet potatoes, casseroles, etc.
3. Budget. Create a food budget and don’t go over your budget.
4. Local shopping. Visit local vendors to purchase meats, fruits and vegetables which will be much cheaper than the grocery store.
5. Ask for help. If you are having breakfast, brunch or dinner at your house ask friends and family to bring a dish to help cut downs on costs.
6. Coupons. Use coupons. Shop at stores that offer double coupons.
7. Shopping List. Use a shopping list and stick to it.
8. Return. If you realize you bought too much of one item return it to the store for a refund.
9. Leftovers. Freeze leftovers or take to work for lunch.

Warren Buffet's Investing Style

I am a big fan of Warren Buffet. However, being a fan doesn’t mean I agree with everything he does or with all of his beliefs. I do admit that he is knowledgeable about investing. It has been stated that “he invests long-term and understands what he invests in”. It is essential that with anything you do or anything you put your money towards you understand. Many homeowner signed mortgage loans and didn’t understand what they were getting in to. As a result they foreclosed on their homes.


LouAnn Lofton wrote a book entitled, “Warren Buffet Invests Like a Girl”. Well, if he does, then all men need to follow his advice too. I think Warren Buffet is a great investor who doesn’t get emotional about investing. His investing is very strategic which was displayed when he bought shares of Goldman Sachs in 2008 for $5 million which made his company Berkshire Hathaway millions. Here is some background information on Buffet:

1. Carried golf clubs at age 9 for $3 a day

2. Bought his first share at age 11

3. Sold used golf balls from age 11-13 and sold newspapers at age 13

4. Bought a small farm which was 40 acres at age 14 with savings from delivering newspapers

5. Rented out used pinballs machines at age 16 making $50 a week

6. Bought Berkshire Hathaway in 1962

7. Bought stock in Coca-Cola, Disney, McDonalds, Gillette, American Express and Dairy Queen

8. Follows 6 Principles: 1) keep it simple, 2) be an investor not a trader, 3) find outstanding business, 4) make your own decisions, 5) leave a margin of safety, 6) Rule 1: never lose money, Rule 2: never forget rule #1, focus on strengths.

9. Still lives in the same small 3-bedroom house in Omaha that he bought after he got married 50 years ago. He says that he has everything he needs in that house. His house does not have a wall or a fence.

10. Don't buy more than what you "really need" and encourage your children to do and think the same

11. Drives his own car everywhere and does not have a driver or security

12. You are what you are

13. Never travels by private jet, although he owns the world's largest private jet company

14. Always think how you can accomplish things economically

15. His company, Berkshire Hathaway, owns 63 companies.

16. Does not socialize with the high society crowd. After he gets home is to make himself some popcorn and watch television.

17. Don't try to show off, just be yourself and do what you enjoy doing

18. Does not carry a cell phone and does not have a computer on his desk

19. Stay away from credit cards (bank loans) and invest in yourself

20. Money doesn't create man but it is the man who created money

21. Live your life as simple as you are

22. Don't do what others say, just listen them, but do what you feel good

23. Don't go on brand name; just wear those things in which you feel comfortable

24. Don't waste your money on unnecessary things; just spend money on those who are really in need

Do you still think Buffet invests like a girl? Let me know your feedback.

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