We all have dreams and ambitions in life that require a huge amount of money. Some people might prefer getting a personal loan and fund their needs; while others may choose to abstain from increasing their debt burden and opt to take the longer route of saving.

However, starting to save is not always easy especially when doing it for the first time; and maintaining the discipline of saving at regular intervals is even harder for most people with a personal savings plan.  The following steps will help you to get started on the right footing; and when you are into the game of saving, they will help you to remain focused and maintain your regular deposits to your savings account.

Create a record of all your monthly expenses

Expenses are what deter us from saving and therefore the best place to start your saving journey is by noting them all down. These include the snacks you buy each day on your way to work, the amount you spend on newspapers, money spent on entertainment with friends and the regular monthly bills such as electricity, water, grocery, rent among others.

The goal here is to account for every dollar that goes out of your pocket in a given month. After listing all your monthly expenses you will then need to categorize them into major groups such as utilities, groceries, house rent etc. and then find the totals for each category in order to identify where you are spending much of your money.

Develop a monthly budget

Once you have a clear record of all your expenses arranged in order of their sizes, you then move on to listing all your regular income sources per month and sum them up to find your total monthly income. A comparison between your total expenses and your total income will then show you whether you are operating on a budget deficit or on a budget surplus. 

A deficit is a situation whereby your expenses exceed your income; while a surplus is a situation whereby your income exceeds your expenses. If you are having a budget surplus then you can maintain your monthly expenses at the same level and start saving the extra income.

Cut down your costs

If on the other hand  you are having a budget deficit, you will need to restructure your expenses and increase your income sources in order to first bridge the deficit gap and then start saving. A new job for an additional source of income might not come immediately and therefore the first step in bridging your budget deficit is to cut down on your monthly expenses. This will involve removing luxury cost items you can do away with from your budget and starting to survive with the basic things that enable you to live a decent life.

You will also need to make changes on your credit cards by shifting to credit cards with rewards and which charge lesser interest rates. This will help you to both reduce your monthly credit card expenses, as well as help you to earn pseudo-income every time you go shopping; through the loyalty points you get which you can redeem later on for actual goods and services at no extra cost.

Develop a concrete savings plan

After disciplining yourself to survive on basics of life and bridging your budget deficit, you will start earning surplus income that will need to be planned for in order to avoid wasting the money after accumulating it for a long period of time. The first step in planning your savings is setting a minimum amount that you shall be saving every month.

You then need to make your savings automatic in the sense that, instead of you withdrawing the money and depositing it to your savings account; you have a standing order such that your savings are deducted even before you can have access to your salary. This reduces the temptation to spend the amount meant saving and smoothens your savings plan.

Have a sound goal for saving

Saving just for the sake of it will only accumulate huge amounts of money in your bank account which you will eventually blow away in a wasteful manner over unplanned expenditure. To be more disciplined in your savings plan, you need to have a very sound objective for saving in the first place.

You could choose to save for your school fees, to buy a car, buy a home, for a vacation or any other thing that you value most. Having these bigger goals helps you to remain committed in your saving journey; and when the target is reached the money is utilized prudently in a valuable thing that improves the quality of your life.

When you start saving from scratch, the end always justifies the means. The sacrifices you make in terms of cutting down your expenses and looking for additional part-time engagements to boost your incomes; will only be valuable if the end goal is big enough to keep you committed to the course.

Creating Your Savings Plan From Scratch in 5 Steps is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Having a new baby can get you to rethink your priorities. Putting your child’s needs first can include investing and can help you as much as your child to become a smart investor.

Getting your baby started as an investor can set them up for a lifetime of financial success.

Here are four ways to help your baby grow up to be a smart and wealthy investor:

Start a college savings fund

College can be an investment in a child’s future. Starting to save for child as soon as a child is born can be one of the best investments a parent will make to help their child.

Don’t wait a month or so after your child is born. Because if you delay it now, you know what will happen next — you’ll continue finding excuses not to do it and eventually your kid will be asking you how they’ll afford to go to college and you won’t have an answer.

A 529 plan is one way to save for college. Legally known as “qualified tuition plans,” they’re available in all 50 states as a pre-tax way to invest money. The other type of 529 plan allows tuition to be paid ahead of time at some colleges.

Whatever amount you invest regularly in a college savings account, it can only help your child possibly avoid borrowing money to pay for college. In 2015, 68 percent of graduates from public and nonprofit colleges had student loan debt, with an average of $30,100 per borrower, according to the Institute for College Access & Success.

Open a savings account for your child

The personal savings rate in the United States has dropped regularly since the 1970s, and is now at 5.7 percent, according to the U.S. Bureau of Economic Analysis. Americans averaged an 8.32 percent personal savings rate from 1959 until 2016.

If you want your child to be a saver, then open a savings account for them as soon as they’re born.

Why would a baby need a savings account? Because you’re likely to get some cash gifts either now or on their birthdays. That money is meant for the child, not for you to spend on a night out, so do the honest thing and put the money away in the child’s savings account when you get it.

Yes, savings accounts have pay lousy interest rates now. Even if they do go up soon, it may be more profitable to put the money in a long-term CD or an investment account in the child’s name.

The point is to have some sort of account to put gift money in. If you’re feeling especially kind, contribute to it every month with an automatic deposit from your checking account.

Invest in one stock

For the cost of one share of stock, you can make your child a long-term investor by joining a Dividend Reinvest Plan, also known as DRIPs.

The compounding interest from paid dividends of DRIPs is reinvested to buy additional shares of the stock at little or no cost. You can enroll in a specific stock’s DRIP after buying only one share, and can contribute to it regularly with automatic debits from a checking or savings account.

You don’t have to regularly buy additional shares of stock, but you child will thank you in 20 years if you do.

At the very least, that one share of stock will show your child the value of investing for the long run. Who knows, they may want to someday invest their allowance there and end up investing in other stocks.

Be an investor in an index fund

If picking one stock for a DRIP is too risky for you, show your child the benefit of cutting investment costs by being an investor in an index mutual fund that has low expenses.

Since you’re unlikely to beat the market, find a mutual fund that mirrors popular groups of stocks and bonds, such as the S&P 500 index.

Mutual funds charge management fees, ranging from 0.06 percent on a diversified index mutual fund to 1.5 percent or more on an actively managed fund.

Do your child a favor and invest in a fund that has the lowest possible fees — which are usually index funds. Find one that is 1 percent lower than an actively managed fund and you’ll save tends of thousands of dollars over an investing lifetime.

You may not be able to successfully make all of these investing resolutions in the new year for a new baby, but two of them should be no-brainers: opening a savings account for any money given to your child, and starting a college savings fund.

Start the stock market investments if you can afford them, even if it’s only with a few hundred dollars. It will someday show your child how much you care about their financial future, and can be a way for them to learn how to be an investor on their own.

4 Ways to Get Your Baby Started as an Investor is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

The same holds true with giving them access to savings accounts, direct deposit and goal setting, according to a new study by America Saves on such things on low-income youth workers.

It found that low-income urban youth will save consistently when giving access to savings tools.

The survey respondents were 16-20 years old, participated in a summer employment program, and had low or moderate family incomes, according to the group America Saves for Young Workers.

Here are some of the highlights of the report:

• Following their summer employment, 58% of youth, on average, owned savings accounts, a 66% increase in ownership.
• Following their summer employment in 2015, youth ownership rates for savings accounts exceeded that of national low-income teens by 34%.
• 76% of young workers were given a choice of how to deposit their pay, and an average of 66% self-elected to use direct deposit.
• Following their summer employment program, and corresponding involvement in the America Saves program, 80% of young workers had established a savings pattern, an increase of 54%.
• By August 2015, 61% of young workers had met the pledge goal they had set at the beginning of their summer employment.
• Savings amounts remained relatively steady over time with an average of about $400 saved.
• Youth continued to save after their summer work experience with 61% of young workers having made a deposit eight months after their summer employment ended, despite only 38% of those youth being formally employed.

“This is the first time that many of these youth will receive a paycheck and the America Saves for Young Worker program plays a pivotal part in motivating them to save part of their pay for items they want and need, and for those unexpected expenses,” said George Barany, director of strategic initiative for America Saves, in a statement.

“This special moment in time then becomes an opportunity for employment programs, financial institutions, and America Saves to show young workers how to save and, more importantly, help them set up the systems to save automatically,” Barany says.

Give Kids Savings Tools, and They’ll Save Their Money is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

From childhood, we are urged to save our birthday money, Christmas money, allowance, etc.

Sadly thought, those habits often don’t carry across into adulthood. Many Americans don’t have a savings account, let alone a retirement account (but that’s a whole other post).

If you haven’t started a savings account, go start one! Depending on the account, you can get started with just $5.00.

If you are struggling to build your savings, here are some great ideas to help build your savings account starting today!

Save a Flat Amount Per Paycheck

If you haven’t already set up a budget, you should. In that budget, set a flat amount that comes out of your paycheck and into savings. You can do this manually or make it an automatic deposit. If you don’t have it in your budget, then you won’t want to save it.

Set a Savings Goal

It’s hard to achieve anything without an end in sight. You might be saving for a car, a laptop, or a down payment on a house. Your goal can be just to save a certain amount per paycheck, or to save an amount each year. Setting realistic achievable goals can build your savings faster than you think.

Try a Savings Challenge

For example, you could try the 52 week savings challenge. This is where you save $1 the first week, $2 the second week, ending with $52 the last week. By the end of the year you will have saved $1,378! There are numerous other challenges, like a penny a day for 365 days or a $1 a day for 365 days. They are fun and a great way to challenge yourself and your family to see who can save the most!

Set Up a “Keep the Change” Transfer

This program is one that’s offered at most banks, although it may have a different name. Every time you use your debit card, it rolls the change into your savings account automatically. It may not amount to much, but an extra $5-10/month is still a good way to build your savings. Check your online bank account to turn it on or ask your bank teller.

Check Out Digit

Digit is an online savings account that draws directly from your bank account. It recognizes your spending habits and moves money over according to what you can afford that month. Digit is free and you are guaranteed to never over-draft your account. It’s a great way to build your savings without you having to think about it.

Switch to an Online Only Bank

For example, some strictly online banks, like CapitalOne360, have higher interest rates than a physical bank. If you put some money into a savings account or other fund, you will see more interest growing in your favor. It may not grow fast, but it still adds up over time.

Having a savings account is a critical for good financial health. Without a savings account, one can fall into debt faster and have it add up quick.

Can you think of other ways to build your savings?

6 Different Ideas to Build Your Savings is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

On the surface, Britain’s economy is going gangbusters. Quarter after quarter we are seeing increases in GDP, and domestic spending is strong. Despite a generally cautious attitude as UK and international property buyers await a referendum outcome, high volume demand on the residential housing sector and high occupancy in the commercial sector are keeping prices high.

But underneath this shiny exterior, there are some troubling facts and figures. In the last few years, housing prices have inflated much more quickly than wages. Families have so far managed to bridge that gap, but at a cost. Goods prices have also inflated in accordance with a strong economy of late, and spending has kept up.

These factors have kept Britain’s economy ticking along nicely, but at a cost: household savings rates in the UK are at a record low. And we don’t mean compared to the last financial year, or even since the credit crunch- Brits are currently saving the lowest percentage of their disposable income since records began 50 years ago.

These figures have been creeping up on the government for a couple of years now, but top economists like chancellor George Osborne are preaching observation rather than concern. Osborne recently warned against ‘reading too much’ into any figures in isolation, but finished by saying the lack of savings is a trend worth watching very closely. At the moment, there’s no immediate concern. But what could happen to the financial resilience of UK families if the unexpected strikes?

What are the factors that are encouraging UK earners to spend more and save less? On the one hand, the UK may have been relying on overspending to climb out of the credit crunch, or to avoid the stick, metaphorically speaking. On the other hand, it has been suggested that low interest rates on savings accounts are failing to provide the carrot.

Another possible influence is the historically unprecedented safety net of the NHS. Thanks to the NHS, households can suffer and recover from serious accidents and illnesses without needing to spend years of saving or losing assets, as is all too frequently the case in the US for citizens without corporate healthcare or significant life savings. The NHS is undoubtedly good for the UK, but there are those who loudly disagree, and one never knows what political change may take place a decade ahead. Significant cuts to the NHS may make spenders more inclined to plan for the worst outcome, and we could see spending habits become more frugal as a result.

A vote to leave the EU would also cause a ripple effect of changes to the UK’s economy, many of which can be guessed at, but the sum total of which is impossible to know in advance. If you’re wondering what sort of a loan you might be eligible for should your personal savings fall short, use an online loan calculator. 

With Record Low Household Saving Rates, UK Lacks Padding Against Next Economic Storm is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Predicting if and when the Federal Reserve will raise interest rates is a fool’s game, though plenty of people try doing it.

The recent inaction by the Fed to hold interest rates where they are may prolong global uncertainty, though it’s a global uncertainty that has been around since the last time the Fed raised interest rates in 2006. Its main interest rate has remained practically zero since then.

The Washington Post reported that some Fed officials expect interest rates to be raised sometime this year — which leaves only four months. Its top officials are scheduled to meet twice more in 2015: October and December.

3 ways to beat the Fed

If interest rates do rise this year, there are some financial habits worth starting now in preparation for the rise. Here are three:

Repay student loans

This may be difficult for college students, many of whom have student loans, but limiting debt and paying loans before graduation will help avoid inflated balances and reduce monthly payments after graduation, according to Scott Smith, president of Seattle-based CreditRepair.com.

Early repayment will free up income for post-grad purposes. It will also reduce a borrower’s credit utilization ratio, an important factor in keeping a credit score as high as possible.

Higher credit scores will help qualify you for lower interest rate loans, which will ultimately offset any future interest rate hikes by the Fed, Smith says.

Don’t carry credit card balances

Credit cards can help build a credit score if used properly. If you’re carrying a monthly balance, it could hurt your credit score, as could making late payments.

An interest rate hike will ultimately cause credit card rates to increase, affecting people with large credit card debt.

When applying for a credit card, consider annual fees, your ability to repay and all service charges, Smith recommends.

Practicing discipline with a credit card is important, as is paying all of your bills on time. By doing this, an interest rate hike will have very little effect on credit card users.

Savings accounts finally win

The best part about the Fed raising interest rates is that savings account will finally see a rate hike in interest rates.

Saving is difficult, so starting the habit of saving now before interest rates rise will make it a lot easier when you’re earning more money on your savings.

This article by Aaron Crowe first appeared on CashSmarter.com and was distributed by the Personal Finance Syndication Network.

Source

3 Financial Habits to Start Before Fed Raises Interest Rates is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.