Savings Can: How saving starts with below means mentality

Do you know how much the average person has in their savings account?

The statistics look bad. No, let’s just say they’re terrible.

The answer to that question is startling and stunning: about 40 percent have no savings account whatsoever. About 80 percent have about a thousand dollars or less.

So that begs the question: where is all of our money?
Look around your house, your driveway and you might get your answer. Living beyond what your means or even just at your means tends to lead to the biggest reason why we don’t save money.

We’re simply too busy spending it to think of that.

And then, you have the kind of success stories that you marvel at, the ones that are written in big bold headlines that leave you thinking “why can’t that be me?” when you hear about a couple that buys a $150,000 house with cash or a 25 year old that has managed to work a modestly paying job and save a half a million dollars and set to retire by the time he reaches 35, at the latest.

How exactly are all of these things possible?
There really is no magic theory in regard to what makes money tick for these people and why they’re so far removed from the aforementioned statistic about money saved, or lack thereof.

They simply live below their means.

Just because you make $70,000 per year doesn’t mean you should spend $80,000 on your expenses or even butt up against that 70K mark. The truth is those who have money saved and don’t worry about money are able to save it because they’ll take a $70,000 year paying job and live off $30,000 of it quite comfortably because they make decisions that allow them to work, have a car, house and other amenities but focusing primarily on having money leftover as the most important piece to that puzzle.

How do they do it?

Simple. They don’t buy used or pay full price. They’ll take a $15,000 vehicle instead of buying a new one for $40,000. They are approved for a home at $250,000 and instead buy one for a third of that price and have a mortgage that allows them to do two things: have money leftover and add to the home through renovations with money that comes out of their own pocket versus expensive loans.

For most, we equate spending to happiness and that just isn’t the case. Those types of purchases, services or items that you don’t need don’t create the kind of smile you’d have it you went without those and instead had the peace of mind that your money is exactly where you want it to be: saved.

Trend Unsettling: How to save money when so much is centered on spending

The numbers are in, and the winner is: your job.

So, maybe that is an oversimplification of the overall topic at hand, and that is how much you have to spend just to be able to save. And the “save” portion in this discussion means working.

The average person spends almost $4,000 per year in order to work, when you factor in things like lunch at a restaurant, clothing allowances and the cost of transportation (such as gas or tolls, etc.).

That adds up to just under $200,000 in your lifetime, which might not sound like a whole lot but the more glaring is the $4,000 number mentioned that we’ll spend from one year to the next.

So when so much is about saving money, how can be justify spending that much just to work? Even more important of a question is how to we actually get that $4,000 number lowered so that work doesn’t seem like we’re just punching in and punching out just to barely get by?

Well, almost half of that total number focuses on eating, specifically spending money eating out at restaurants for lunch. The easy fix on that is to actually take the time to plan meals, make lunch the night before and stop spending between $10 and $15 on just one meal a few times per week. A good plan would be to make dinner at home, and then leave just a little bit aside for the next day, so that lunch isn’t about making a sandwich or another meal per say but rather over preparing and cooking and then having leftovers. If you must eat lunch out, such as a working lunch or food that is bought and centers around a meeting where food isn’t provided, go light.

Transportation is another higher end cost, even though the cost of gas is down somewhat versus a year or two ago. Some have found that carpooling works well, while others have started to think more efficiently when it comes to vehicle purchases and gas mileage. More progressive employers allow you to work from home a few days per week, and if they don’t, it certainly wouldn’t hurt to ask if you have that sort of job that includes office days for paperwork, the same work that can easily be done at home.

The average worker might also want to consider small expenses throughout the course of the day, such as bottled water or snacks.

No one is going to suggest that a work stoppage is in order as far as saving money goes, but you still can implement certain techniques to keep your yearly expenses in check.

Card Sharks: How to avoid credit card missteps

Credit cards, for those who have them and struggle mightily with them, can be summed up in one very simple word.

Evil.

The other end of the financial spectrum views credit cards for what they are: emergency funds or a line of credit that can be manipulated and used to get a higher credit score, when you know exactly how to navigate one.

That means opening a card, using it, and paying off the balance in full (or close to it) as soon as the bill comes. The other side of the coin is filled with a bevy on mistakes that, when made, are not only going to kill your credit score and ability to borrow money but make saving that much more difficult since you’ll be saddled with more bills to pay, some of which can cost in upward of a minimum payment.

The biggest mistake most make when it comes to credit cards is using them too often for the wrong reasons. Credit cards can be used to order something online when you don’t want to give your debit card out or if, again, you’re trying to build credit.

These cards were never designed to be used to charge vacations, for down payments on a vehicle, pay bills or buy groceries. If you can’t afford to hit the beach, you don’t go. If you can’t pay your bills or buy food with your money, then your budget needs reworked and thought through a few more times.

You also can’t be credit card happy and lapsing in the same breath. Opening too many credit cards or lines of credit at once only is going to serve to destroy your score and the overall picture painted by creditors of you when you apply for loans that matter, such as a home or car. The lapse part comes with your propensity for making payments past the due date. If there is one simple, commonly agreed upon principle of credit and credit cards that would be to always pay on time, even if it is just the minimum.

At the very least, the minimum payment shows that consistency and responsibility creditors absolutely need to see when they even consider you for a loan, and your credit score will reflect just how good or bad you are at being able to make payments on time.

Credit cards don’t always have to have such a bad wrap. They can be useful when the person behind the plastic card knows exactly the pitfalls and how to avoid them.

Game On: How to play catch up with your savings

Have you ever felt like, money wise, that with every passing day and dollar not saved that you’re constantly playing a game of catch up with your savings account?

What makes matters even worse is the constant barrage of expertise and opinion that states you should be converting income into savings at a rate of 5 to 10 percent with each paycheck, making sure that “nest egg” stays nice and warm (and untouched) heading toward retirement or, specifically, if something happens that you need cash up front to fix (i.e. medical expenses, home repair, etc.)

But if you aren’t saving, there must be a reason why.

And your job is to find it, correct it and start saving now, rather than later. Don’t get bogged down in the fact that you aren’t where you need to be but instead about where you want to end up when it’s all said and done and your golden years are upon you.

Playing catch up sounds daunting but it doesn’t have to be if you exercise a few budgeting maneuvers and adjust your income in the process. Income adjustment means simply that you look for ways to increase your stream of money coming into the household. Some do this with a convenient part time job or perhaps starting to sell items that you no longer need.

When you’re friend who makes less than you all of a sudden tells you that he or she paid for new furniture just on odds and ends from the basement, your ears should perk up immediately.

In addition to addressing your income, you also want to budget by taking two “wants” off the list. Incidentally, a want is something you don’t need to live, such as a $300 per month personal trainer tab or trips to and from the salon to get the works (nails, massage, pedicure, facial, etc.).

Yes, no one is going to argue that these things are fun and, at times, necessarily when stress hits an all time high, but you have to limit them to the point where you’re not spending hundreds of dollars per month in lieu of saving that cash.

That doesn’t mean you can’t ever have a massage or treat yourself to something but instead those buying impulses should be tempered for special occasions or extremely sporadic. Some have eliminated them all together and watched as saving $200 or $300 per month on “wants” turns into about $5,000 at the end of a calendar year.

Imagine how you’d feel if you had that kind of money waiting for you after 12 months of playing catch up. Not only would you have that savings account well on its way to being built but also you’ll be in the process of learning how to save, and that is more valuable than any purchase.

Worry Warned: How to finally stop being concerned with money

So don’t let the headline fool you. You should always concern yourself with money, but not in the way you might think.

When you talk about paying attention to money, that means having a budget, making sure you know what your expenses are and always try to lessen them any chance you get, so that you can save money for unexpected expenses and retirement.

That overview is what you should be “concerned” with, not so much the constant worrying you have when it comes to the almighty dollar.

Worrying about money isn’t new to the general public. You have plenty of individuals doing anything from paying bills without a budget to living beyond your means and not really understanding what the problem is.

How exactly do you stop concerning yourself with money in a way where your spending and saving is almost on auto pilot?

Well, the real trick is making sure that your budget isn’t just there, but also is updated to reflect changes in income, an added expenses or change in a line item, either more money needed or less. The ever evolving budget is something that only the really good money managers know and then do, rather than just writing on a piece of paper what they spend on the larger items or simply refuse to update and tweak as needed or is warranted.

This shows not only the ability to adapt but understanding exactly what your money situation is, and how to fix it. The real problem we find for those who can’t manage money is they don’t truly understand that a problem exists. You wouldn’t necessarily call it sticking your head in the sand, but you’d be hard pressed to see accountability when it comes to money, and that centers on worrying about having the latest and greatest products or keeping up with the rest of the world, when in actuality you can’t afford it.

And if you’re struggling debt wise, you have to address it, get it under control by any means necessary. That can start with consulting a financial planner, consolidating debt or finding some way to lower interest rates (even if it’s balance transfers that you know can be paid off during the special rate time period).

Saying or suggesting you’ll never worry about money is silly. That simply isn’t going to happen, but your concern should be that of how to continue to improve your standing, rather than wondering how you’re going to get from one money gaffe to another.

Pertinent Planning: Why smart decision can quell money concerns

If you’re not concerned about money, you should be.

In fact, the majority of people have more than just worries about money and their financial future: it is the kind of angst that keeps them up at night.

Granted, if you’re struggling financially and have a plethora of debt and can’t seem to get ahead, you’ll indeed worry on a consistent basis.

Those trepidations about money are just, since chances are your financial situation is a bit of a mess for a variety of reasons: budgeting, living beyond your means and not having everyone in the household on board with exactly how the plan should work to save money.

But quelling your issues when it comes to money centers on being able to get out in front of those concerns with the type of foresight that some of the better financial experts have and use to their advantage.

They don’t worry about money: they plan accordingly just in case it ever goes away.

And if you poll the average individual about what keeps them up at night money wise, they’ll tell you things such as losing their job or having some sort of major expense that they know they won’t be able to pay for or take care of on their own.

Other concerns include things like consumer fraud or having your identity compromised, but those aren’t things that are necessarily predicated on money decisions you make. If you have your identity stolen, and you’re totally safe on a secured web site, then sometimes bad luck follows.

This is more about those major medical bills, car repairs or home improvements that must be done, along with retirement and other money related decisions that you’re making all wrong and thus worrying about something (money) that you can regain control of on your own terms and at a moment’s notice.

For starters, budgeting is paramount in order to really start to be able to save. And budgeting isn’t defined with being able to know the amount of your car payment or mortgage and the due dates, but rather it goes far beyond that. Budgeting is about knowing all of your expenses, the ins and outs of what you’re buying, spending on and what should essentially be leftover.

Without those numbers on paper or a spreadsheet, you’re just guessing and hoping, both of which won’t get you very far financially.

No one can tell you that you won’t be worried about money: even the best at it are.

But you can mitigate some of those nightmarish financial thoughts by starting with the basics of budgeting and building out from there to rest soundly knowing you’re on the right path.

Running on Empty: Will you have enough money to see retirement through?

Do you want to make every last dollar saved for retirement actually last for your entire time you’re not working?

The answer, for everyone, should be a resounding “yes.” When polled, retirees (or ones on the cusp of doing so) say their biggest fear about retiring is simply running out of money and thus being forced back into the workforce to take on a job to cover expenses when they’re 70 plus years old.

Hello, early retirement (not really).

If you’re worried about running on empty financially as retirement comes closer or you’re in the midst of it (at least a few years in), some would argue that you didn’t do an adequate job of planning. While that has some truth to it, the argument also could be made that you might have a surprise expense here or there, as well.

So how do you make your money last or even grow as you get older and make your way safely and securely money wise through retirement?

What tends to fall by the wayside the fastest is actually having a budget beyond retirement. As much as you scrimped and saved and watched all of your dollar and everything made sense, why would you think it to be a good idea to let that disappear once you hang up your work clothes for good? Far too often, you’ll hear of people running out of money because they spend it as if there still is the same amount of income available as when they were working.

You have to adjust that budgeting process accordingly with what ever drop you have in your income and also allow your saved money to play into that. If you only have $60,000 to retire on and you made that amount of money per year when you worked, and nothing about your budget changes, you can see the major flaw in that plan.

Refinancing also can be a worthwhile option as well, even thought that word often is met by a lot of grimaces and groans. The idea that you can refinance means that you lower rates, consolidate debt and thus spend less per month without extending the payments to a degree that has you paying on a home, for example, until you’re 105 years old.

Retiring should be a time to put your mind and body at ease, and that includes what happens with your money. If you’re prepared to retire and have taken all the steps to do so expertly, that’s only the beginning as the budgeting and paying attention to your money isn’t about to let up as far as importance goes.

Off-Limits: Certain money habits are always bad ideas

Depending on who you talk to, money is greatly debated as far as what is smart, prudent and good and, of course, what you want to try to avoid.

But as much as we discuss, often time common ground eludes us on things like budgeting, paying off credit card bills and other money related issues.

There are, however, some money habits that we all can agree are bad news, no matter who you are or what perspective you take with them.

For starters, if you’re someone who pays for vacations, groceries or bills with your credit card, you’re living beyond your means and your budget needs a serious overhaul, without question. That type of behavior is not only going to put you in debt but it is a cry for help that your income is not what it needs to be.

And as long as we’re discussing credit cards, are you only paying the minimum on those? If that’s the case, you’re setting yourself up for a lifetime of debt. Instead of the minimum, why not follow the lead now being set forth by the card companies who have to tell you what amount will get you out of a debt faster, such as suggesting a $100 per month payment that will have the card paid off in three years rather than the minimum of $35 and 20 years of debt with one charge card?

Budgeting also is paramount, and if you’re one of the millions of individuals that has no budget and just earns and spends without a care in the world, you’re not doing yourself any favors as far as saving money is concerned. Budgeting is the lifeblood of saving, and without one that is true to your income, your expenses and all the little incidental buys you have throughout the course of a month or year, you’re only sabotaging your ability to save.

You’re also making it very hard to have a nest egg, savings account or emergency fund. Call it what you will but what it boils down to is you should have money in hand just in case something happens you’re not prepared for at this very moment. Otherwise, you’ll be begging, borrowing and only increasing your debt.

To go along with budgeting, you can’t overlook financial decisions you make with a budget in mind, such as spending more than 35 percent of your income on a home and thus becoming “house poor,” a term coined that suggests all of your income is being sucked up by your mortgage payment.

Money will always be a polarizing topic, but some money mistakes are blatant, obvious and so bad that the masses have no problem nodding in unison at them.

Tech-Savvy: How technology can help you save money

Do you fancy yourself as a smart, financially prudent individual? Do you have a budget, track what you spend and make sure you know what your expenses are versus your income?

If you answered “yes” to all of those questions, congratulations on being smart with money.

That isn’t to suggest, however, that you’ve reached your financial pinnacle as it relates to saving money, and in fact, you have just started.

You see a budget is more than just the basics, more than just the obvious expenses, and understanding that is going to really help you devise a budget that works, versus one that looks good on paper.

And you might not be quite as keen on those incidental expenses, and that can present a problem simply because you have expenses that aren’t tracked and thus can’t be identified. The only reason you know something is wrong is that you don’t have as much money leftover at the end of the month as you might think.

Enter the world of wonder that is technology.

As much as banking still centers on paper checks and hand made deposits, you can’t underscore just how much technology can really be an eye opener when it comes to how you spend your money beyond things such as your car payment, mortgage or other expenses you never overlook.

My forage into technology as it relates to banking started with what is called a virtual wallet, something that manages your money and, at first glance, is an elaborate, overblown ledger that is lot of colorful charts but also allow you to see where your money is going as almost the version of an adult picture book of banking.

What this showed was a penchant for overspending incidentally to the tune of nearly $900 at a well known, national convenient store famous for its made to order food and gas. The gas part is totally understood, but I was able to separate that from the actual purchases of anything from bottled water to iced tea, a cup of fruit on the go or a breakfast sandwich before work. Little did I know I was spending nearly my mortgage payment on that in just one month. Needless to say, I was appalled and realized that my previous budget that I thought was nearly perfect was hardly even worth the paper (or spread sheet) it was written (printed) on, and thus totally changed my perspective on how to budget.

That led to a better understanding of saving money and how I spend, thus creating a real plan to put money aside that actually works now.

Bad News: Debt is bad, but do we really understand why?

As much as the word “debt” carries with it a negative connotative meeting, the majority of the world, to the tune of 50 percent or greater, has at least $20,000 in unsecured debt. Sounds a little like a contraction?

If we know at the core of the money discussions that debt isn’t a good thing, why do so many people have it? Do we really realize that debt is bad, and do we assume that debt is a part of life, something no one can escape and thus we accept it for what it is, just as routine as brushing your teeth or showering?

The fact is debt is bad, and we all know it. But what tends to get in the way of that thinking is our wanting to buy what we can’t have, own what we don’t need or have the things that others do with the means to own it.

Debt gets in the way of having the things we want to have that matter, the kind of good debt we all want: buying a house, owning a car or being able to fund our education wants and needs. That type of debt is what would be considered a need, something that is going to either gain in value (house), allow us to be more efficient (car) or earn more money as we continue to learn (education).

Having debt or buying unnecessarily and not having a controlled, followed budget also keeps you from retiring on time (or early) and building a savings account in the event that something unforeseen happens, such as medical expenses, home repair or car issues that allow you to have the money on hand to fix or pay these, rather than borrow more money.

Probably the most daunting element of debt, and why we should think longer and harder about just how much it is a negative: stress. Debt and having it is extremely hard on your nerves, which in turn can cause ailments, medical issues and other relatable problems that you can draw back to when you’re fretting over how you’re going to pay your bills from one month to the next.

Yes, we know debt is bad, but yet we give it somewhat of a free pass. We take debt as a part of life we just have to cope with, rather than viewing it the way it should be, and that is as something we all should be striving to eliminate once and for all.