After the stock bubbles and housing busts of the last few decades, it is no wonder that many people are feeling insecure about their financial future.  In order to make sure that you will be able to handle any financial emergencies that occur in the future, it is important to ensure that you will have enough in your savings account to pay for the issues that arise.  The simplest way to make sure that the balance of your savings account grows quickly is to pay yourself first whenever you are paid money.

Paying yourself first is one of the secrets of financial success and can be done automatically without any thought or effort.  Most of the people that are good at accumulating wealth know this secret and practice it all of the time, saving a percentage of each paycheck or payment made to them to ensure that their savings account will continue to grow.  Prior to paying any bills or making any purchases, they make sure that they have placed the required amount into savings first.

Practicing The Rule

Many businesses give employees the option to split their direct-deposited check into up to three different bank accounts to help them deposit money into their savings account automatically each pay period.  This prevents you from seeing the money in the bank account that you use for spending and removes the money from your spending allowance so that it cannot be spent without the hassle of moving it back into the account that you use for spending.  It is a simple method that can relieve financial anxiety and help you secure your financial future.

Reasons For Saving

This method can be used for any type of saving you desire, not just for your emergency saving account.  Many people have a percentage of their paychecks direct deposited into accounts for their child’s college fund, a down payment for a home, or an individual retirement account.  Because it is such a quick and simple way to save, the technique can be used for virtually any type of saving need, even for investing accounts or large purchases that will be occurring within the next few years.

Creating A Plan

When setting up a savings plan, it is important to take into account what you are saving for and how long you intend to save for it.  If the savings are being diverted to an emergency savings account or retirement fund, then you should plan to allow the funds to accumulate for a long time without withdrawals and place at least 10% of your earnings into the account.  If the money is being saved for a particular need, then the best course of action is to determine how much money will be needed to make the purchase and divide the cost by the number of months before the purchase will be made.  This helps you obtain a dollar figure for how much you should be saving each month to make that purchase on time.

The savings rate in American has severely declined over the past decades to be virtually non-existent today.  This means that many people across the nation are living close to the edge without any savings or are carrying debt because they have spent more money than they have earned.  Instead of saving up for the things that they wanted, they placed the purchases on their credit cards to be paid off at a later date.

Although commercials continuously show that you can use credit cards to purchase all the things that you desire without physically having the money to pay for it, they do not show you all of the pitfalls that come along with using your credit cards instead of your savings to pay for what you want.  Because of these factors, saving your money to purchase large ticket items is a better financial strategy than purchasing the item on credit.

Increased Costs

You will pay more for an item purchased on credit than you would if you had purchased that same item using cash.  This is because of all of the additional fees and charges associated with using a credit card for purchases.  In addition to the interest charged for placing the purchase on the credit card, there is also the annual fee for the credit card and any other expenses that occur from having a purchase on the credit card, such as late fees and over the limit fees.  Although these costs are not directly assigned to a particular purchase, you are still paying them because of the purchases made with the credit card so a portion of these costs can be assigned to each purchase made.

Financial Issues

Debt has a way of quickly spiraling out of control if not managed correctly and avoiding debt is the easiest way to avoid encountering these problems.  People that are not carrying debt and have some money saved in a savings account are better equipped to handle the small financial emergencies that can arise at any time.  They have less risk of not being able to pay all of their bills or harming their credit score.  These people are also better positioned to make large purchases in the future, as they will have an adequate down payment for their purchases.  Saving your money to spend it is a much better strategy that using credit to make purchases.

Life will often serve up a couple of financial curveballs, and when that happens it’s essential that you are financially prepared for it. The only way you can ensure that you are prepared is to have an emergency fund, a healthy amount of cash that is easily accessibly should you ever need it.

Emergency funds are often one of the most neglected parts of personal finance but in my opinion they are one of the most important. We don’t like surprises, but if your car breaks down, or your boiler stops working at home how will you be able to cope without a backup source of funds to turn to?

To create and maintain an emergency fund takes dedication and discipline, but if you start to build one slowly then you’ll soon forget that you even started it. I’ve read many times that you should have between 3-6 months worth of expenses in your emergency fund, but this is fundamentally up to you to decide, only you know your level of expenses and your level of debts.

Most sudden losses of income are just that, they are sudden emergencies that we had no idea were coming. If for example your car breaks down, you still need to be able to drive to work so you will need it fixed as soon as possible, without a fund it will probably lead you down the road of lending the money which will just leave you in debt.

Getting started is the hardest aspect of an emergency fund, think small and start building your fund slowly, maybe even just $20 a month. Save what you can afford and slowly you’ll realise that you can build on the amount you save, moving on from $20 to $40 and so on.

Make sure you get the most out of your emergency fund by leaving the money in an interest bearing bank account, but it’s extremely important that the bank account is easily accessible. You don’t want to find out your boilers broke then realise you need to give 1 months notice before withdrawing your hard earned cash from your account.

Choose your high interest bank account carefully, maybe in the US you’ll use a standard savings checking account that doesn’t cost you any money to withdraw, and you can do so whenever you need some cash. In the UK we have a cash ISA account that is brilliant for easily accessible savings.

When setting up your emergency fund probably the hardest thing you’ll have to deal with is temptation, try not to touch your fund unless it’s an emergency. You might see a nice watch or a new pair of shoes that you like but remember that these emergencies can happen at any time, and it’s better to be safe and prepared than sorry.

It is a common belief across the nation that a person has to buy a home to invest in their future.  However, another common belief is emerging as well, the belief that you must rent to live a lifestyle that allows you to enjoy yourself and your money and that the price of home ownership is not worth it in the long run.  Both beliefs bring up valid arguments, but whether a home will be an asset or a liability will depend on the person making the purchase.

Buying A Home

There are many individuals that aspire to own their own home and work very hard to achieve their dream, often working multiple jobs or going without unnecessary items to save enough money for a down payment.  Purchasing a home allows the individual to do whatever they would like to the home to customize it to their particular tastes.

There are many hidden costs associated with homeownership that can be a great deal more than the owner expects.  This is one of the primary reasons for homeowners defaulting on mortgage agreements.  Some common hidden costs that they forget to take into account include the lawn care equipment and products, water and sewage bills, increased energy costs, and repairs to the appliances in the home.

Renting A Home

On the other side are the individuals that believe that renting a home is the only way to go.  They see the costs of homeownership as so expensive that many individuals have no money leftover for the things that they would really like to do and have to live with a lower quality of life because of the expense of owning a home.  For them, the many benefits of renting outweigh the attractions of owning their own home.

The renters have many of the same rights to the properties that they are living in as the homeowners living in other properties because their rental payments are purchasing the right to live in the property as their home.  Renters are not typically allowed to make structural changes to the property and must return the home to its original state if they choose to move to another location.  Renting a home frees the renter from the cost of major repairs and the rental agreement with the property owner ensures that any structural piece of the property that becomes broken will be fixed promptly and correctly.

With credit becoming more important every year and reports of large scale identity theft surfacing regularly, people are concerned about being able to obtain a free copy of their credit history to check for cases of identity theft.  Every year, you should check a copy of your credit history to make certain that your identity has not been compromised due to lax security at a company that keeps its customer’s personal information. 

Identity theft is one of the fastest growing criminal acts in the nation.  Nearly 10 million people are affected by identity theft annually.  It is very important that anyone that has access to a free copy of their credit history because of a security issue at a company they have used take the time to review their credit history regularly while it is available.  This way, the person will be aware of the information is being reported to the credit bureaus in their name and can report possible identity theft before major damage to their credit history can occur.

Where To Get A Free Copy Of Your Credit History

If personal information has been compromised by security issues at a business, the business will generally pay for access to a free copy of your credit history for at least one year after the security issues occurred.  There are dozens of websites that offer a free copy of your credit history but will steer you towards subscription based services sold by the credit reporting bureaus instead.  Typing “free copy of credit history” into a search engine will result in a list of links to websites sponsored by or selling services for the major credit reporting bureaus.

People who obtain a free copy of their credit history through these websites find themselves enrolled in credit monitoring services sold by the credit reporting bureaus.  When these services are chosen, the company notifies them whenever something new occurs with their credit that is reported to the credit bureaus.  If the person’s identity is stolen because of security issues at a company, the company will pay for the person’s enrollment in one of these credit monitoring services.  This allows the person to access a free copy of their credit history to make sure that their information is not being used by the criminals. 

You should look closely at any website offering a free copy of your credit history because sometimes these websites are created by criminals that are looking to steal personal information.  The person believes that typing their personal information into a form on the website will give them access to a free copy of their credit history, but they are giving the criminals all of the information needed to open credit accounts in the person’s name.  It is very important that you use an authorized website to obtain a free copy of your credit history so that your personal information will remain secure.

One of the ways that a car insurance company entices customers to purchase their policies is by offering an insurance discount if the applicant meets certain criteria.  These insurance discounts differ from company to company and two companies offering similar discounts can have many differences in the details and the instructions for claiming the discount.  In most cases, the insurance company makes it easy to claim your insurance discount by keeping careful track of your account and automatically making reductions when your account is reviewed.

Many different insurance companies offer their policy holders an insurance discount for completing different tasks or avoiding claims on their policy.  Claiming your insurance discount will differ from company to company and depend on the type of insurance policy that has been purchased.  The most common type of insurance policy offering policy holders an insurance discount are car insurance policies.

Car insurance policies are used to cover everything from accidental damage to theft to loss of life.  In many states, it is illegal to drive a car without proof of financial responsibility, such as a car insurance policy or a document stating that you have enough money to take care of the costs for any accident that may occur.  The car insurance industry has a number of different companies competing for the car owners and drivers that require car insurance to drive legally.

The most common type of insurance discount available is the accident-free discount.  This reduces the amount of your deductible by a certain amount for every year that you do not have an accident or make no claims against your insurance policy.  The accident-free discount is popular because it rewards you for doing something that saves the insurance companies money.

If you are choosing an insurance company based partly on the availability of an insurance discount, there are several things to keep in mind.  You should read the terms and conditions of the insurance policy carefully to ensure that you know all of the details of the policy and what you will need to do to be eligible for the insurance discount.  Many individuals choose insurance companies because they like the discounts available only to find that they are not eligible for the discount due to common factors, such as age or type of car driven.

WHEN I was training as a journalist, I was taught that the key to explaining any idea, concept or story, was to address the five “W’s”.

Who? What? Where? When? and Why? were the five questions that had to be answered in order to tell any story properly. Since then, I’ve found that the ‘five W’s’ method is the best way of explaining anything to anyone.

If you’re thinking about putting some money into savings (and if you’re not, you should be), then here are the ‘five W’s’ of savings.

Who

Who should be putting money in savings? The short answer is you. Anyone and everyone reading this post should have at least some money in savings.

Parting with your disposable income to build a savings account takes a lot of discipline, but will see you well prepared for the financial burdens waiting around the corner.

What

Savings accounts are different all around the world. In the UK, and Individual Savings Account is the norm – allowing customers to save a set amount of money which they cannot be taxed on.

With an ISA account, you are not expected to pay income tax on the interest your savings accumulate. There is a limit to how much you can put in an ISA though, with the 2010-11 limit being £5,100 per person.

Where

A lot of banks are vying for your savings, and with interest rates as low as they have ever been, it is important to find the right place to put your savings.

Websites like Moneysupermarket and CompareTheMarket have tools which allow you to compare the current ISA rates, so you can make sure you find the right home for your money.

When

Now! Although interest rates in the UK are low, there’s no time like the present to start saving.

Bear in mind, however, that the limit to the amount you can put in an ISA account changes in line with inflation each tax year (April 5 to the following April 6).

Why

Some pundits say that we should have a savings pot equivalent to three months’ salary, so that we are equipped to deal with surprise expenses and financial burdens. Car repairs bills, for example, can run into hundreds of pounds and strike when you least expect it.

If you were unable to work for an extended period due to ill health, a savings pot would provide some sorely needed support.