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Trick yourself into saving more

Posted by on Jun 12, 2014 in Saving | 8 comments

Why is that when people start the discussion about saving more money, their first inclination is to put up barriers as to why they can’t save? It seems as if the more time we have to think about saving, the more time we have to talk ourselves out of it. Yes, life is expensive. But that should be even more of a reason, to start saving more. After all the expenses, sometimes finding the money can be tricky. But here are a handful of ways to trick yourself into saving more.

Sometimes it’s easier to save big

Research suggests that people may spend small bills more freely than large bills. And when I think about it. It’s often the case for me. I have had a $50 bill in my wallet for months now. I feel bad about breaking a $50. But in the meantime, $5, $10, and to a lesser extent, $20 bills, have come and gone. Of course you could forego using cash altogether, but that opens up a whole other can of worms.

Getting credit for using cash

As many already know, there’s a lot of evidence that points to consumers spending more money when paying with credit cards than when paying with cash. But by how much? Well, in one study by Drazen Prelec and Duncan Simester, randomly selected participants were told they would be offered the opportunity to purchase sold-out tickets to an upcoming pro basketball game. One group had to pay in cash, the other by credit card, and were then asked how much they would be willing to pay for the tickets. Those who were told they would have to pay by credit card were willing to pay over twice as much on average, as those who were told that they would have to pay by cash. Sometimes it pays to leave your credit card at home. Especially for larger purchases, cash is still king when it comes to bargaining.

Round up your spending and bank the rest

If you’re already using cash to pay for your purchases, carry bills and toss the change into your piggy bank. Or every time you make a purchase, round up to the nearest dollar or nearest five and deposit the difference into your savings account. So if you spent $18.98, throw an extra $1.02 into the piggy jar. Some debit cards now allow you to round up your spending. The only debit card that I’m aware of in Canada that does this, is the Scotiabank Bank The Rest savings program, where they automatically deposit the difference into a savings account.

Automate your savings

Whatever your goal, the simplest and by far, the most rewarding trick in the book is to automate your savings. Set aside a certain amount to be deducted from every paycheque to go towards saving for an upcoming vacation, child’s education, retirement, or whatever it may be. But unless you make it automatic, you’re relying on your memory and your motivation to save. And even in my case, that’s not a good thing.

You can set up a savings account at a small bank, virtual bank or a credit union that offers no ATM machine near you and where you do not have a checking account. This will force you to think about taking money away from your savings. I have my short-term savings going into an ING (now Tangerine) account. It has limited branches and ATMs around. And while I still can transfer freely among my online accounts, it still takes a couple days for transfers to appear. So it takes a bit a planning. Who knew hassles could be a good thing?

Bank your raises

If you get an increase in salary or wages, and just leave it in your checking account, some other expense will soon take it over. Instead live like you’re living now and bank your increases in a separate savings account. Even a paltry 2 or 3 percent raise might not seem like much now and on each paycheque. But at the end of the year, you’ll probably earn a healthy sum you can put towards an emergency fund, add to your retirement funds, or put towards that trip that you’ve always wanted.

Turn habits into dollars

Smoking, drinking, or expensive hobbies, you get the point. They all add up. Some habits/hobbies are more difficult to bury than others. But cutting back even one cigarette a day, one drink a week, or limiting your hobby spending can put a few more dollars in your pocket. Just save the extra savings, and in this case, what’s good for your wallet is also good for your health.

Snowballing your savings

Once you’ve paid off a debt, car loan, student loan, what have you, continuing making those payments – except this time – to your savings account. And watch as your previous debt payments snowball into savings rewards.

How about negative incentives?

Sites like StickK have popped up to help you track your goals. Except it’s a goal-tracker, with a bit of a twist or shall we say, penalty kick? You set what your goal is (i.e. to lose 30 lbs or pay off $1,000 in debt) and a time limit (i.e. in one month, one year, etc.) But if you fail to meet your goals you can StickK penalize you. For example, you can have it deduct $10 from your credit card, every week that you miss your goal, or some people are penalizing themselves by having it donate to an organization, political party or corporation that they really hate, if they fail. That way they’re motivated to keep on track of their goal. This is probably one of the most unorthodox ways I’ve heard of motivating you to save money. But, hey, whatever works.

As you can see, there are countless ways you can trick yourself to save, when the motivation just isn’t there. Longer-term savings take a lot more discipline, but that’s why it’s always important to give yourself little rewards along the way. Make saving fun, and the money will follow.

What methods or motivations do you use to save?

Copyright: voronin76 / 123RF Stock Photo

Gardening can be fun for your kids too

Posted by on May 29, 2014 in Uncategorized | 5 comments

One of the things my dad has always enjoyed was his garden. And up until last year, at the ripe age of 82, my old man was still out there every day, picking at and tending to his fruit trees and large vegetable garden. His health has deteriorated in the past year, so this past weekend my brother and I went up to prepare his big garden for the summer. It was a lot of work, but we owe it to my dad. His garden has provided us with years of fresh fruits and vegetables.

Exercise your green thumb and your wallet

If you don’t live on a farm or have the space for a large garden like my dad, consider starting a little one, even in planters. There’s many benefits besides financial ones, but if you’re counting your beans, building a little garden is fairly inexpensive. You can go organic without buying organic and it can be done without the need for any fancy gardening tools – just a little bit of daily maintenance (i.e. watering, weeding, etc.). And if you have a rain barrel or a container that you can use as one, even better. Just two dollars, can get us a bag of seeds that’ll feed our little family with about 3 seasons of tomatoes. Not too bad.

There’s also plenty of health benefits that come from gardening and some experts now believe that nature helps heal, lowering blood pressure, boosting immune function and reducing stress. Check out this article from WebMD.

Gardening is a great workout. Some may be happy to know that doing general gardening activities (like digging, weeding, etc.) can burn on average 167 calories per half hour for a 155lb person and 200 calories for a 185 lb. person. But there’s nothing better than seeing what you’ve planted come to fruition (pardon the pun). You can begin to build healthy and delicious meals for your family around what you just planted and save money doing it. Ones that were grown by you, without the use of nasty chemicals.

Weed it and reap

Aside from the health benefits, the best benefit, I’d have to say, is what your kids get from it. It’s a fantastic way for your kids to learn where their food really comes from. It encourages them to get active, eat healthy, learn about nature and nutrition and most of all, it’s a great bonding experience. And they’re more likely to eat something they’ve grown.

I can remember from an early age, my dad giving me a bean seed to plant and I was to guard it and water it all summer. I was so proud of that plant. The next summer I got my neighbour (who was the same age) into a friendly competition to see who could grow the tallest bean plant. One day we had the plant-off and although his bean plant came pretty close, my plant won it in the end. “What became of the giantess and the castle, nobody knows.”

So far this year, we’ve planted tomatoes, beans, basil and chives in addition to our raspberry bush and mulberry tree. A fairly small garden in comparison what we used to have years ago. But it’s manageable for us. And we want to get our kids involved. My 3-year old loves helping us out in the garden, digging, planting flowers, something she seems to have a natural affinity for. And what kid doesn’t like to play in the dirt?

This year we set up a bean teepee for our little 3-year old to play in. She loves to hide under tables and things, so we made a little teepee out of bamboo sticks that we got from the dollar store, and planted some bean seeds all around. So, she’ll hopefully have a nice little shaded cubby she can play in – that is, if the neighbourhood rabbits don’t get to my beans first.

Gardens are for kids too, silly rabbit

Today, so many kids seem to be growing up zoned out in front of the TV or computer. But I want my own kids to embrace the summer and learn how to make their own entertainment. And encourage your kids to do the same. As a kid, I never saw indoors until the sun set. Gardening is a great way to get them outdoors and it also teaches children so many valuable lessons such as responsibility and patience – learning that a seed doesn’t grow a tree in one day; it gives them confidence; teaches them about science and sustainability; harvesting and sharing. I could go on and on.

But at the end of the day, anyone can start a little garden. Even your little ones.

Photo credit: Pink Sherbet Photography / Foter / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Budgeting a pay increase

Posted by on May 22, 2014 in Budgeting | 4 comments

Researchers have shown that the happiness of a pay raise is short-lived, but I don’t think there’s really much to complain about or much harm in having one. Whether you earn one through moving jobs, at your own job, or increasing your freelance rates, to someone getting even a $2,000 raise per year, it could add up to hundreds of thousands of dollars over their lifetime, if planned correctly. But unfortunately, even with a significant pay increase, many end up where they started.

If you have no goal to attach to your money, it’ll just end up getting swallowed up by life. And there’s no happiness in a pay raise, that you have nothing to show for. All it takes is a little planning.

If I had a $1,000…

What would you buy if you had an extra $1,000, $5,000, $10,000 or more in salary? Would you put some money aside to plan for a trip? Put some aside into extra mortgage or debt payments? Investments and retirement savings? A car? Child’s education? Take up a new art class you’ve always wanted to join? Hire a housecleaning or lawn maintenance service? I can go on and on, but the fact remains, it’s all in your control.

Who doesn’t daydream every once in a while about what you would do if you had a bit of extra money? Anytime I’ve received a raise, I usually wait until after my first pay until I start allotting my extra pay. This allows me to pad the account with some extra fun money for the first while, and also it lets me know, exactly what my net income increase will be. While there are calculators that can give you an estimate as to how much tax will be deducted from your paycheque, I haven’t found them to be quite accurate. I don’t want to start funding an investment account, for example, only to find I’m investing more money than I have to invest. Do it once, do it right.

Some may have noticed I’ve been a little quiet around the blogosphere. Weeks ago, I got a call from a former employer, offering me my old job back. Truth is, I hadn’t really left. I was still working for them at nights, when I could, on top of my day job, additional night time courses taken, and of course the blog. Which led to many late late nights, after the kids were put to bed. And at times, I felt like I was burning the candle at both ends. Well, it’s a good thing I never burned my bridges. Suffice to say, I took the job. Which means I’m no longer having to work those crazy nights and now have more time to myself (and I’m taking it) and more time to spend with family. Which was also one of my top priorities this year. Check! And I won’t lie, the extra money is kind of nice too.

There’s a cost to changing jobs

Before you start any position, obviously you would have had to factor in any extra costs applicable to your new job, and hopefully negotiated your terms before accepting the offer. But there are always those things you either forget to account for or sometimes the move may make sense even with the extra costs.

Aside from any major costs like relocating for work, there are every day things that you also need to account for, such as:

  • Clothing. In my case, showing up in clothes I was wearing 6 years ago, probably not a good idea.
  • Transportation costs. Is it further away? In which case, you’ll be spending more on gas, car insurance, car maintenance, etc. Or are you taking any toll roads?
  • Do you need to purchase any extra equipment? (GPS, new phone, upgraded phone plan, etc) as part your job function or because of a longer drive?

Of course, one can argue that staying in a job that pays little to no increase will cost you more in the long run, than moving jobs for extra money, even with all the extra expenses accounted for. Nonetheless, these expenses should still be accounted for and I’m sure you can think of many other examples.

Now for the tally, Sally

Once you have your confirmed paycheque amount, subtract your latest paycheque from an average paycheque from your last couple months either from your current job or at your last job. Subtract the expenses and jot that number down.

Now’s where the fun begins. Take this number and plan how you would like to divvy up the extra dough. Talk it over with your loved one and set some quick goals for the year. It can take you all of 10 minutes or as long as you’d like and automate what you can, and leave the worry behind. But whatever you do, take a couple of minutes and make a plan. Don’t let your pay increase slip through your fingers.

Image courtesy of pat138241 / FreeDigitalPhotos.net