Wednesday, February 4, 2009

How a Disciplined Saving's Plan Helps You

Saving money is a stated objective for most Americans. The conversations about money discuss debt, bad credit, and an occasional remorseful story about money wasted. Most people will tell you that they need to do a better job of saving and they wish they had more saved. If saving money was a real objective for Americans, we’d have more saved.

The value of saving is not etched into the soul of people. Having a lucrative job and taking home lots of money should be adequate to bill a large savings account. Yet, people will buy more expensive cars and houses to show their success rather than increase their savings account. Real savers have budgets and have acquired good spending habits.

Budgets help you identify goals and help you plan for the future. People generally spend every dime of their take home pay. But, what would happen if you established a goal of living off of half of your take home pay?

This isn't an impossible task. It does takes planning and commitment, however. Planning requires you identify a budget that only uses half of your take home pay and commitment requires you to stick to the plan.

Needs and wants dictate how we spend money. The goal of treating your basic expenses such as rent/mortgage, food, utilities, allowance, and insurance as your primary needs will help you understand how you are wasting money on your wants. Your needs can’t change but your wants can be adjusted.

Theoretically, let’s take a $300 savings plan, assuming this is half of your take home pay, and see how we can acquire more when we incorporate disciplined savings into our budgets. First, identify short term (vacation, emergency fund, and miscellaneous) and long term (college fund, 401(k), and IRA) objectives. Decide how much is needed for each objective. For our illustration, we will have 6 accounts and allocated $50 to each.

Vacation - $50 Emergency Fund - $50

Miscellaneous - $50 Child’s College Fund - $50

401(k) - $50 IRA - $50

Managing and redirecting your current wants will enable you to have greater accomplishments. Your current wants are also known as your short term goals. They're usually inexpensive to obtain and only provide temporary satisfaction. A new purse or a new pair of shoes may satisfy a current want but it will only be replaced by a similar want in a very short period of time.

Saving half of your take home pay allows you to identify and accomplish larger goals. Defining and classifying a savings goal helps you achieve short term and long term goals. Discipline will be learned when you allocate money to multiple savings objectives.

Taking the monies saved for vacation. Based on a biweekly pay period, you will save $650 annually for a vacation. This may not be enough to take the dream vacation you currently want. You know that if you save more this dream vacation is attainable. A vacation is a luxury that can be included in the average budget.

You will not only be accomplishing your savings goals, you will also have your money working for you. The money you save accrues interest. Investing your money in stocks and mutual funds can make your money work even harder.

If you open an account in a bank, you will only earn compound interest. This may be adequate for your vacation and emergency fund saving objective. However, if you purchase the right stock and mutual fund, you will gain more by receiving dividends and capital gains. Your child’s college fund, your 401(k), and an IRA may not be used for 20 – 30 years later.

Saving half of your take home pay may be a bridge too far at this time. It can, however, become an aspiration. Setting high goals that are unattainable gives you something to work toward. When you fall short of reaching this bigger goal, you will be that much farther ahead. In other words, your objective is to save half but you were only able to save 30%. That’s still good. It’s better than setting a goal of saving 10% and only saving 3%. The higher you set you goal, the better off you will be.

Monday, January 26, 2009

Teach Your Children How To Save Money

Unfortunately, it's all too easy to raise financially irresponsible children. The danger: Your kids will grow up to be financially reckless, and you will feel compelled to bail them out. Don't want to spend the rest of your life footing their bills? Then teach your children about saving money.

It is important to give youngsters financial responsibility. You can start with a toy-and-candy allowance when they are five or six years old and then, once they are teenagers, you can step it up with a clothing allowance and a bank account. The goal: to get your kids to make tough financial decisions. If they are always asking you for money or they are merrily racking up charges on the credit card you gave them, their desires will be limitless and spending will seem painless, because they aren't paying -- you are.

What to do? You have to set up a system where, instead of you saying "no," your kids have to say "no" to themselves. The goal: to get your kids to make tough financial decisions. The most important financial skill your child can learn is the ability to delay gratification.

As adults, we have to properly teach our children about earning money, good spending habits, and saving habits. A child is never too young to learn. I have a 3 year old grand daughter who is currently being taught the value of a dollar. Her mother has developed a technique that excites her child about earning money.

My grand daughter works for pay. She is paid 25 cents everyday for completing the following chores. She makes her bed, brushes her teeth, puts away her toys, complete her studies, and helps mommy with the dishes. She is given a star each day for successfully completing her chores along with her 25 cents. Every day she gleefully places the star on the calendar and puts away her money in her purse.

At 3 years old, my grand daughter does not want to spend all of her money at one time. When she goes to the store, she chooses to buy only 1 item so that she will have some money left. Her mother teaches her the different coins and practices using them when they play with her kitchen set. When she pretends with her shopping cart, she buys her pretend eggs, milk, etc. with real money.

No matter how poor you are, you can always teach your child about earning money. The child readily adapts to working for pay and finds creative ways to save. My grand daughter does not walk over pennies. Now when she sees a penny on the ground, she announces she has found money and gladly adds it to her stash. She understands how valuable money is when you go to the store.

Thursday, August 7, 2008

Why the Word Instant Controls You

Spending money on music and movies is no longer necessary when you can download the information. Free download sites that offer newly released movies and music are easily found on the internet. Changing how you get the things you want will free up money for savings.

The item you purchase to satisfy your need of instant gratification is draining your budget. You bought it!
1. The clothing ensemble for that special engagement.
2. Television advertisement
3. Home shopping network
4. Grocery shopping – extra items not on your grocery list

As you shop for groceries you find instant oatmeal, instant grits, instant coffee, instant pudding and instant rice. Whatever sport you watch on television, you’ll find an instant replay. Looking online for a job you’ll see ads on becoming an instant millionaire. Everybody loves to play the infamous instant lottery.

Some diets want you to believe that you can loose weight instantly with a pill. The fat just melts off. Another pill that works instantly is the one for a headache. Please don’t forget about the newest must have craze, instant messaging.

Product marketing has created a society of people who can’t wait. Somewhere in Corporate America a marketing team decided that 20 minute rice was too long and it needed to be cooked in 1 minute. Minute rice made the old cheap plastic bag of rice move to the bottom shelf. Product marketing have now managed to take the longest game in the world, chess, and made it instant.

People don’t save money because they are making too many sacrifices and their balances aren’t growing fast enough. They want their $100 savings account they just opened to be worth $1,000 by the end of the year. After all, the bank was paying interest.

Seeking instant gratification is not good money management. Change the way you think about spending money and saving money. Rethink your wants and prioritize your needs.

Compulsive shopping habits that overwhelm you can be solved if you search the web for free stuff. It looks like everyone is searching for something to download on the internet. People want everything free. To save you gas and to make this shopping trip easier, here’s a list to start with:

This short list will get you started. It should start you craving for more information and help you stay out of the stores shopping and spending money. Enjoy your movies and music. The more you learn about managing money, the more you will have for saving.

Tuesday, December 4, 2007

Why I Did It

Why I Did It
I sit at my keyboard writing countless articles on budgeting, planning, money management, and investing. I don’t know who will read the article. I don’t know if the person reading the article will understand what I am saying and use the advice given.
Then one day the following email was sent to me – Please read:
Hi Joanne,I never really paid attention to my finances, and I didn't think too much about the importance of saving, investing, and having a retirement plan, even life insurance. Many people need to take heed to their lives and children's future. I'm now 31 and a year ago it hit me that neither my future, nor my child's future has been secured. Sometimes you have to constantly put it out there for people to finally get it. There needs to be an attraction to open people minds and eyes on how important this stuff is. Most people, as myself, wait until they get that wake up call (faced in a crisis) to see. Well, I thank God that he has opened my mind and eyes. I thank God for a person like you who established an opportunity to educate us. You're drawing attraction by posting and sending out information constantly to show what's important. God Bless you.
This was my response:
Your comments have reassured me that I need to keep posting and sending out information. Your feedback lets me know that you GOT IT! Now I know that my efforts are not in vain. If I can reach 1 person and they tell others, then I have accomplished what I set out to do.


By Jo Ann Brown – Author - “Getting Started On Your 401(k) Plan”

For those walking past with a look of astonishment and wanting to ask What Happened? Look no longer, for I will tell you that I have suffered from a disease that robbed me of any chance of prosperity. I’ve used it as a crutch all of my life until I had no dreams or aspirations. I’m an expert of putting off until tomorrow. I am the world’s Best Procrastinator.
Years ago, about 35 as a matter of fact, I thought retirement was a long ways away. I was young, viral, and living for the week-end. After working 15 years, the company dissolved its pension plan and gave me something called a 401(k) plan.
I put off reading about the 401(k) plan because I didn’t think it was important and none of my peers seemed concerned. I escaped the first big lay-off but no one escaped the company closing for good.
I’ve worked, but the jobs don’t pay any benefits. Well, I was working until I got hurt. You know, one of life’s uncertainties that happen to other people? It’s been a while since I’ve had steady pay and now I find myself homeless.
Today is the day of sweetness. You’ve been telling yourself long enough to get started on your 401(k) plan. Just Do It!
First thing tomorrow morning, get your company’s membership number from the Human Resource Department. Second, get the plan administrator’s email address and phone number. Using your computer or the telephone, get registered. It’s fast, simple, and easy.

Tuesday, November 13, 2007

Overcoming Financial IL-Literacy


My name is Jo Ann Brown. I am an author. The title of my book is Getting Started On Your 401(k) Plan.
This is not your ordinary Finance book. This book is easy to read and understand. It takes you step by step and it helps you to better understand your choices included in your employer's 401(k) plan.
I wrote the book because 77% of the workers don't understand investing. I purposely made it user friendly to entice you to read it. I want to help you make better choices and prepare you for a better future.
I write articles weekly for the newspapers.
I publish a monthly newsletter.
See for yourself how easy it is to overcome Financial IL-literacy.
Include me in your event planning.
I offer a Financial IL-Literacy Workshop and Seminar. It's about 3 hours long and I GUARANTEE this will be the best Finance Education you've ever received. Not only will I show you how, I am going to provide handouts that tell you where to get started. The information is FREE.
No, I am not selling product like life insurance. I am giving you the knowledge needed to help secure you financially.
Look for Financial CoachWebsite: