Ways to save money by spending more

Saving money by spending more sounds contradictory. But what if it’s true though?

Frugal living is has always been a popular lifestyle choice, both among the financially independent, as well as for those living paycheck to paycheck.

However, often times choosing to pinch pennies only gives us the illusion of saving money.

Truth be told, there are certain situations where spending more actually leads to serious savings in the long run.

Here are some examples where you could actually save money on common household expenses by spending more.

1. Choosing to spend on quality ingredients

Cooking at home is well known to be a huge money saver.

However, some people can take it to the extreme and choose quantity over quality.

A common situation is buying food on sale, that’s about to expire. Or, buying fruits and vegetables likely to go bad soon, but for that very reason grocery stores sell them for cheap.

To save money, it’s often tempting to choose the (so much) less expensive option!

Problem is, low quality ingredients could potentially lead to health problems. Which in return, leads to spending money. Since medicine and doctors aren’t cheap, you’re probably better off spending more in quality!

2. Spending more on quality appliances / tools / gadgets etc.

Say you need to buy an air conditioner. Or a coffee maker, since your old one broke down because you’ve used it every single day for years!

saving money

If you’ve ever shopped around for.. anything, you must have noticed the huge price difference between different brands.

Now, not all costly items are worth buying. On the contrary, often times it’s just the brand that’s expensive.

However, it is also true that energy efficient appliances cost a lot more than less efficient ones. Just as, low quality gadgets are usually cheaper because they often break down when you lest expect it (or, as proven by Murphy’s law, when you need them most).

In order to save money on utility bills in the long run, you might want to opt for appliances and devices that consume less energy.

On the same note, it’s always worth paying for quality. This way, you won’t have to fork out a serious chunk of money whenever your “new” purchase needs to be replaced.

3. Spending money on quality clothes, shoes & accessories

This might be considered splurging but truth is, quality does last longer.

Although some shoes and clothes can be both qualitative and cheap, other items that complete your wardrobe could wear out after only a few weeks.

What do you do if you find a hole in your shoes? You probably should buy a new pair…

As a result, instead of saving money, you actually spend a lot more by buying the same product multiple times.

4. Hiring help

When you have an electrical wiring problem, do you usually call your cousin Jimmy to fix it for free?

That might be a good plan, if Jimmy was an actual electrician! ‘Cause if he doesn’t know what he’s doing, you might end up with even bigger problems!

Often times, we try to save money by fixing things ourselves. It works in some cases (and can save a pretty penny as well), but hiring an expert when you have a serious problem to fix is probably a good investment!

5. Investing in home improvements

Big or small, certain home improvements can save some serious money along the way!

Adding insulation can turn out to be a costly investment, but do you know how much money you can save on your utility bills in the long run? At least few hundred bucks a year!

Other small investments might seem useless, especially if you’re stressed out about spending money.

However, faucet aerators can help save on your water bill. Energy efficient light bulbs, like LED (light emitting diode) or CFL (compact fluorescent lamp), can help save money on electricity. They’re both small expenses, considering how much money you could save in the long run!

Looking to save money by spending less doesn’t make you stingy.

It’s only natural to look for ways to curb your spending, especially if you’re aiming to become a financially responsible person.

Often times, the more expensive option might be the smart thing to do.

Author bio: Adriana is an experienced web content writer, passionate about everything personal finance. She blogs about the topic over at moneyjourneytoday.com, where she covers everything from saving money and frugal living tips, to real estate and investing.

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How should you deal with your finances to have a safe financial future?

In order to make your financial future safe and secure, you will have to make sure that you deal with your finances in the right way. You will have to know how much to save, where to invest, etc. Thus, it is very important to keep yourself updated about the new happenings in the financial world.

Ways to deal with your finances

Here are few ways which will help you deal with your finances better:

  • Budgeting: When we speak of personal finances, the first thing that comes to our mind is budgeting. Though initially it may be quite tough to create a budget and stick to it, once you are in the habit of it, things will be fine and easier. You should create a budget after you have a proper idea of your income and your expenses. Creating a budget doesn’t mean that you will have to manage within a meagre sum of money. It is just about cutting unnecessary expenses so that you have more money to save.
  • Emergency fund: In order to keep yourself immune against any kind of sudden crisis, you should create an emergency fund. At any given point of time, this emergency fund should have at least 6 months of your income in it. Thus, if you lose your job or have a sudden medical emergency in your family, you can use this fund.

deal-with-finance

  • Retirement savings: It is very important to safeguard the golden years of your life. So, in order to be in a better position, you should start saving for your retirement since the beginning of your professional life. You can opt for 401k accounts or go for any retirement saving options as given by your employer. If you have a lump sum amount as your retirement savings, you won’t be dependent on anyone. You will be self sufficient.
  • Life insurance: Yes, life insurance is also important when we speak of personal finance. This will be of great help to you as well as your family. In case of your sudden demise, this policy will help them in paying off any loan or mortgage that you may have taken out. It can also be of great help to them in order to manage their day to day lives.
  • Avoid too much of unsecured loans: Most of the unsecured loans, except for student loans, are considered as bad debt. These unsecured loans are available at a high interest rate which will eat up a large part of your pay check. So, try to reduce or pay them off. Rather, you can go for a good debt like mortgage, which will help you build an asset for yourself in the form of your house.
  • Consult a financial planner: There are many of us who cannot deal with their finances on their own. In such a situation, it is better to take help of a financial planner. This person will be well informed to let you know where to invest and how to save money.

Hope the above options will guide you in dealing with your finances better!

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Everything You Need To Know About Tax Saver via NPS

Since the Finance Minister offered additional tax benefits for contributing to the National Pension System (NPS), the number of subscribers has increased significantly. The NPS is a defined voluntary retirement scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

Under this system, subscribers must open a Tier I account and invest at least INR 6,000 per year until the age of 60 years. They may opt to invest additional money in a Tier II account. On maturity, investors are allowed to withdraw up to 60% of the accumulated amount as a lump sum. The balance must compulsorily be converted to an annuity plan to earn regular income during the post-retirement years.

pension

 

Every investor receives a Permanent Retirement Account Number (PRAN) on successful application. In case, an individual does not receive this unique number, he or she may check the PRAN status on the regulator’s site or with the Point of Presence (POP). POP is a PFRDA- approved institution where the NPS account is opened.

Tax savings with NPS

Section 80CCD (1)

Subscribers are able to enjoy tax deductions of up to INR 1.5 lacs under section 80CCD (1) of the Income Tax (IT) Act. This section is applicable for availing tax benefits for investments made in a government-notified pension plan. In addition to the NPS the plans include Public Provident Fund (PPF) and insurance policies. The limit under this section was enhanced from INR 1 lac to INR 1.5 lacs, which provides investors the opportunity to enjoy additional tax savings.
The cap for employees under this section is calculated as 10% of basic salary plus dearness allowance. Self-employed subscribers may avail tax benefits under this section for an amount capped at 10% of their gross income.

Section 80CCD (1B)

In the previous year’s budget, the Finance Minister offered a boost to NPS by announcing an additional tax benefit for contributions made to this defined plan. Section 80CCD (1B) of the IT Act offers investors the chance to avail additional tax deductions of up to INR 50,000 per year on their NPS contributions.

The combined NPS tax benefits are advantageous for taxpayers in the highest (30%) bracket. They can save an additional INR 15,450 in taxes [under section 80CCD (1B)] by contributing INR 50,000 to their NPS account.

Section 80CCD (2)

Contributions made by the employers in their employees’ NPS accounts are eligible for tax benefits under section 80CCD (2) of the IT Act. This amount is capped at 10% of the basic salary plus dearness allowance.

Maturity

Since its launch, NPS has been categorized as an Exempt-Exempt-Taxable (EET) scheme. This means the annual contributions made to this scheme and the interest earned are both tax-free. However, investors have to pay taxes as per their tax slabs at the time of maturity.

In Budget 2016, the Finance Minister has relaxed the tax on maturity. As per the revised regulations, 40% of the lump sum withdrawal on maturity is now tax-free. If the subscriber opts to withdraw more than 40% of the accumulated corpus, the difference is taxable at the prevailing tax rate. The amount converted to an annuity is tax-free; however, the income through this plan is taxable in the year it is received. The annuity income can be calculated using a pension calculator.

The PFRDA in October 2015 has further provided benefits for NPS subscribers. Subscribers may now withdraw the lump sum amount in 10 annual installments until the age of 70 years. Using this modification wisely may benefit subscribers in further tax savings.

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How Much Money You Should Save

So many of us are wondering about this important financial questions of how much money we should be saving. It’s an important question to have the answer to, but the answer is not so simple. When it comes to how much money you should save, each person’s circumstances, goals and worldviews are different, which makes it difficult to give a one size fits all answer. Many suggest saving 10 % of your monthly income, but for some that will prove to be too difficult and for others, they have the ability to stock away a little bit more. There are a few guidelines that can help us to put things into perspective and decide what a good savings rate would be for ourselves despite what Mr Jones down the road is saving.

savings

The first thought to ponder on, is what are you saving for? There are so many different reasons to be saving money. You may be interested in a short term saving, to be able to afford your annual vacation. The amount you should be saving for this can be worked out quite easily, based on the cost of the vacation and how long you have to go before you’re required to make the bookings.

Perhaps you’re thinking bigger than just your annual vacation and you want to have some sort of nest egg for the unexpected emergencies, or a “rainy day? fund. On top of all this you may be thinking about saving for your retirement too, which when it boils down to how much you should be saving, has a lot of other factors that come into play.

So once you know what you want to save for, it puts your monthly savings into perspective. Now, you don’t only have to be saving for one certain thing. You could have a short term savings, a savings cushion and be saving toward your retirement all at the same time, and that is probably the best thing that we should all be doing! Covering ourselves and providing our families with financial security the whole way.

The second thing that impacts on the amount that we should be saving each month, centers on the stage of life that we are in. If you are in your 20’s, saving for your golden years, then you have room to play with and you won’t need to be putting away huge amounts of cash each month. As the years go on, and the closer you get to retirement age, you can increase your monthly contributions. But if you started focusing on your retirement later on in life, and it’s around the corner from your, then if you can manage it, your monthly savings should be as high as you can manage, in order for you to be able to maintain the standard of living that you’re used to, when you’re no longer earning.

Be smart about your savings, and whatever you decide, make sure that you are putting something away each month without exception!

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Baby boomers face a retirement savings downfall – Vital tips to retire rich

As we come to the beginning of 2016, majority of the Americans say that they’re focused towards increasing their retirement savings fund. But if you take a look at how much they’ve actually taken action according to their words, you will see that they’re far from reaching their goal last year. As per a new report by Black Rock, the average baby boomer shares the same goal of accruing enough of their retirement savings to have at least $45,000 a year in the form of retirement income. However, to the utter shock of the researchers, the average retirement portfolio shows that they have just $135,200 in it which means an average estimate income of around $9,125. This amount would leave the average baby boomer with nearly $37,000 short of his retirement savings goal per year.

retirement savings

The truth is that the so-called ‘nest-egg’ of the retirees is broken and they don’t know where to invest and where not to. One of the main problems of the baby boomers is that they’re extremely conservative about their investments. The average American retirement portfolio consists of cash (65%) which is not at all enough to offer the kind of growth which is needed to boost their investment goals. Around 4 among 10 investors are of the opinion that they wished to have cash saved in the form of security cushion before they can think of investing their dollars for the sake of investing.

Retiring early and yet being wealthy – Do you understand the principles?

Whether you believe it or not, building your financial safe for achieving a financially secure retirement is indeed very simple. In fact, the equation for fiscal success is the combination of 3 easy-to-comprehend principles:

  • The total amount of money that you invest
  • The total growth rate of your money and
  • The amount of time that your funds take to grow

However, it is pretty unfortunate to note that very few people actually succeed in building their financial safe before their retirement as they simply don’t understand the above mentioned 3 principles. The challenge isn’t only in the knowing them but it is rather in turning the knowledge into meaningful upshots. Retirement planning is nothing similar to rocket science and hence you have to invest your time and wisdom to judge and make informed and wise decisions about saving money and simultaneous investing.

6 Golden rules which will help you retire rich

1) Spend less than what you make in a month

The primary formula of retiring rich is actually putting more money into the bank as Social Security money isn’t the only cushion which can help you lead a prosperous life after retiring. Experts recommend people to spend 90% of the money that you make in a month and keep aside the remaining 10% in the bank account. In case you have 0 savings in your bank account, make sure you first concentrate on creating an emergency fund.

2) The earlier you start saving, the better

Thanks to the rule of compound interest, even a little money that you save now can help you in a huge way during your retirement. But in order to reap the most benefit, you should start saving as early as you can. If you’re 20 years of age and you still think you can put in money to your retirement fund, you should do so as this is the best way in multiplying your savings till the time you retire. On the other hand, if you wait until 40 to start saving $100, you would be saving much less. So, start saving as early as possible.

3) Start contributing money to your 401(k) account

If you’re working, you will definitely get the benefit of a 401(k). Don’t ever make the mistake of not contributing money to this account as this is what shapes your post-retirement future. Based on your income, decide on the amount that you want to continue saving so that you can keep running your family and meeting all your necessary and discretionary expenses every month. Make a wise decision when choosing the amount.

4) Don’t leave any free money

If someone wished to hand out $100, would you deny him? That is exactly what you should follow when you receive free money from your employer for contribution to the 401(k) account. Most employers will offer you a matched contribution and you should gladly accept it. This will indeed enhance your retirement savings and will help you a lot in the near future.

5) Remain informed about what you invest

Don’t make the mistake of being dumb with regards to your investment. You may take the smart risk of investing in the emerging market but a dumb move might make you pour all your savings in vain. In case you think that you can’t take care of your investment on your own, you should hire an investment planner who can take care of your investment assets and make sure you earn profits. Always weigh your options so that you know that you’re taking the right step.

6) Work for a longer time

Although you can file for Social Security benefits when you reach the age of 62, you will definitely get a lot more money when you wait till the age of 70. When you hit the full retirement age, you can achieve an 8% increase in the benefits every year. However, ensure that you file right at the age of 70 as you won’t get any extra benefit for waiting after that particular age.

Look for different ways of increasing your income as without this, you might not be able to increase the amount you save. Live within your means and don’t splurge during the holidays as this will leave you with a financial hangover which will continue till the New Year. Look for a raise in your monthly income and work hard to achieve all your goals.

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Will Bad Credit Ruin My Christmas?

If you’ve got a bad credit rating, then you may think that you are facing a bleak Christmas, particularly if you are short on money in the run up to the festive season. You’re not alone in this – there are hundreds of thousands of other people who’ve made mistakes in the past who are now finding out that it is going to be difficult for them to be offered loans, credit cards, mobile phone contracts and other forms of credit. Sometimes, this is through no fault of their own – they may never have been late with a repayment but might not be on the electoral roll or have never taken out credit in the past.

You may have run your financial affairs responsibly for years but something you did up to six years ago means that the major financial institutions regard you as too high a risk to lend The good news is that there are many other options for securing a loan or a credit card if you are suffering from a bad credit record. Because the major banks have failed to return lending to the levels seen before the financial crisis, the market for alternative lending is very large and many lenders are quite happy to help people who have impaired or bad credit ratings.

Bad Credit

There is a huge array of financial products on the market for those with bad credit – many of them with reasonable interest rates, large capital sums on offer and favourable terms for repayment. And, even better, these are available quickly and can be in your bank account in time to cover all the costs of Christmas.

If you suspect or know that your credit rating means your bank is not going to lend you money in time for the festivities, what are your alternatives?

Family or friends

This should be your first port of call at this time of year. The very high interest rates that the press made such a fuss about a year or two ago may be restricted to a few lenders, but if a member of your family or a close friend is in a position to lend you money, the chances are that you will pay less in interest than if you search for a sub-prime loan. This is because even though these lenders cater specifically for people with impaired credit ratings, they are still operating in a market that is riskier than those who only offer credit to people with excellent financial records.

Asking your parents or a friend to lend you some money might be uncomfortable, but those close to you are often only too willing to help out, particularly if you need money in a hurry – which most of us do at Christmas. It is likely that you’ll be able to come to an agreement on an affordable rate of interest and that your family member or friend will give you the right amount of time to repay the loan.

Unsecured loans

There are now thousands of lenders who will consider applications from people with bad credit records. These loans will usually have higher interest repayments than those offered to people with excellent credit records but, in most cases, they are an affordable means of raising money to fund Christmas – which, for most people, is the most expensive time of the year. Because these loans are not secured against property, you won’t be risking your home if you apply for one and because there are so many lenders, it’s a good idea to properly assess the market, comparing interest rates and repayment schedules to secure the best deal. Don’t worry if one lender rejects your application, there are many others to consider. It’s worth using the eligibility calculators which many lenders now offer – these let you see how likely it is that your application will be accepted without a search being recorded on your credit file.

Credit cards

Credit cards are the safest and easiest way to pay for Christmas presents – they offer you instant funds – which you can use at virtually every store and online retailer while protecting you should something go awry with the purchase. Unfortunately, for many people with poor credit ratings, the credit cards offered by the high street banks are either not available or come with very high interest rates. Happily there are now a variety of cards on the market designed specifically for people with bad credit ratings. These cards come with higher interest rates but as well as helping out at Christmas, can help you to reestablish a good credit record. Although they come with lower credit limits, the amounts on offer should ensure that Christmas wouldn’t be such a stretch this year.

A secured loan

If you own your own home but have been unable to secure a loan from the bank, then you will find that you have many more options than somebody who rents or is in social housing.

Lenders are much more inclined to offer credit to homeowners who can put their properties up as security – which means a lower risk that the loan will not be repaid. Such secured or homeowner loans have lower interest rates and longer schedules to repay them than unsecured loans for people with bad credit. If you are looking to borrow a much more substantial sum – typically in excess of £15,000 – then a homeowner loan will give you more flexibility.

There are disadvantages compared with unsecured loans, however. Because you are putting up your home as security, you may face repossession should you fail to make your repayments regularly. If you’re considering one of these loans, make sure that you are clear about the total amount of interest that you will pay because, if you are only looking for a smaller sum, you might have to pay a much larger amount over the term of the loan than if you did by taking out a smaller, unsecured loan.

Credit unions

There has been a rapid growth in credit unions in recent years. They serve local communities and offer both savings accounts and loans. The disadvantage if you need money quickly in the run up to Christmas is that most credit unions ask new members to become savers first.

Payday loans

If it’s just a few hundred pounds that you need to get you through Christmas, a payday loan may prove to be the most affordable option despite the lurid headlines these loans attracted a few years ago. The market is now highly regulated and interest charges and the number of times that a loan can be rolled over are restricted. If you want to borrow, say, £200 for a month, you might have to repay a total of £250 meaning a real interest rate of 25% on the total loan – not the four-figure APR that is advertised.

Article provided by Mike James, an independent content writer working in the financial sector for companies like Solution Loans, who were consulted over the information contained in this piece.

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5 Smart Tips on Financial Budgeting

Financial budgeting is basically referred to as the finest solution to unlock all your monetary success and is also the best means of attaining your goals that you have dreamt off in your life. Personal finance always performs a crucial role in determining the success of an individual. That is why it is important to execute your financial budget by applying some perseverance and discipline. Many obtain help from several professionals like the financial planners, lawyers and accountants. No need to consult anyone as I am there to help you out.

This article will let you know the best tips that one can apply for having a better financial future next year. Go through the tips thoroughly and I am sure that you guys will be helpful.

Prepare a budget

Prepare a household budget that should include all your yearly and monthly bills. Also include your daily expenditure, savings as well as your retirement funding. Actually what matters is your daily expenditure. Preparing a household budget will help you keep control over your daily expenditure. If you find out that your daily expense is too much, cut it down so that you can save a bit more.

Financial Budgeting

Debt management program

It is important to follow a debt management program. It can happen all of a sudden that your debt overtakes your total income and you are forced to make late payments because you don’t have enough money to spend on paying the bills. Make sure that your debt payment should not cross 30% and if it happens, merge some of your store cards with high interest. You should always spend within your budget and always manage your debts .

Manage your budget over the course of time

This one is the most important. When you start with preparing your budget plan, you will need to estimate some of your calculations. It can happen that you are not that aware of the harsh realities of daily life. Suppose, you have underrated your grocery expense and if such a situation takes place, you need to examine the underlying money that you have spend in this particular category and also check out whether your guess was out of reach or not. If you can make such adjustments, then it is sure that you can stick to your budget.

Analyze your budget at frequent intervals

If you want your financial budgeting work properly, it is important review your budgeting each and every month and bout them to your budget goals. This will help you adjust your expenditure habits properly and also it gives you a chance to scrutinize over the areas that crossed the expectations of the budget that you prepared for your benefits. You should always remember the goal that you made or created for your purpose.

Personal Financial Software

Personal financial software is just like that of a personal advisor. The software will ask you similar questions as that of a personal advisor. The software will charge you nothing during its financial planning interview. As each and every minute detail is put in over there in the software, you don’t need to do anything.

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