The amount you save has little to do with how much you make.  According to a study of saving behavior by Harvard, more than 75% of respondents said they knew that their savings were insufficient, especially for retirement.  The 7,700 households they studied were divided into 10 income groups and researchers found that the top 10% of the lowest income group had saved more than $150,000 per household while the middle-income individuals had only $45,000 in assets on average.

The most significant savings factor was the saver’s state of mind. Before you can start saving, you have to stop the spending and stop believing you need all the stuff you’ve been spending money on. Sure you want it, but that is no excuse for buying it.  This way you do not end up with items; you end up with cash. Accept frugality and become a closet cheapskate by learning from your frugal friends.

There are a thousand ways to live on less without making your life miserable. Direct deposit is a great way to save small amounts at regular intervals because the money is deposited into your IRA, 401(k), savings, or money market account automatically after you have filled out the simple forms required to set up the deposit.  Money games can also be effective for saving. Whenever you get a $5 bill, put it aside in a special place for saving. You could also do this with one-dollar bills, with quarters, or all your spare change.  Every couple of months, deposit the money you have saved into your savings account and watch the balance grow.

Another way to save on a small income is saving any windfall payments. Any income-tax refunds, holiday money gifts, overpayment checks or bonuses should be saved in your savings account to be used for emergencies or to meet your financial goals.  In most cases, this money is unexpected and would not affect your budget if it is removed from the amount available for spending.  Do not overpay your taxes, which is the same as lending money to the government interest-free. Go through your tax return and see if you can plan your withholding to have the smallest refund or payment owed possible.

By carefully examining your spending, you may be able to come up with hundreds of additional ways to save money without negatively affecting your quality of life.  The more that you are able to save today, the brighter your financial future will be and your risk of falling into unmanageable debt will virtually disappear.

Saving money is not a common habit and many people have to really work hard to ensure that they are saving as much as they intend.  This is especially true for those who live under a tight budget and do not have much flexibility when it comes to saving.  There are some habits that are easy to implement that will help you stay on track with your savings and making these habits regular will help you improve your financial future.

Use Auto-Deductions

The widespread use of computers and the internet has made it easier than ever for individuals to automate their deductions from their checking account to their savings account.  The amount that is transferred can be set at any amount the account holder desires and the amount can be adjusted at any time simply by logging on to the account online and changing the information.  Auto-deducting your savings from your checking account is a good habit to get into because it allows you to save without having to think about it.

Aim For A 10% Savings Rate

You should be saving at least 10% of your income for emergencies and large expenses that will need to be purchased in the future.  Although this can seem like a significant amount to individuals that are living paycheck to paycheck, these savings can easily be realized by examining your finances and finding one or two routine purchases to eliminate from your monthly spending.  Having 10% of your income going into your savings account on a regular basis will help your savings grow quickly and provide you with a nice cushion against emergencies.

Pretend Your Savings Do Not Exist

Your savings account will never grow if you keep making withdrawals from it and spending the money on things that you probably do not need.  Money should enter your savings account easily and automatically, but should go through a long and careful review process before any money is removed from the account.  The best way to make sure that your savings will grow is to leave the money in your savings account alone and allow the interest to accumulate over time.

It is amazing that some people are willing to pay so much for instant gratification.  For example, one company has made a fortune offering free two day shipping to their customers if they joined their loyalty program for the flat rate of $79.00 per year, turning many causal shoppers into regular purchasers of the company’s merchandise while also paying for entrance into the loyalty club.  Instead of making their purchases at the place with the cheapest price and paying the lowest shipping cost that they can, these customers are paying an additional fee and higher prices to have the items arrive at their home 2 days after purchase.

Spending habits such as these can be difficult to change, but there are a number of ways to resist the pull of immediately gratification and save some money doing it.  Delaying gratification is hard and many people have bought into the idea that shopping and spending money makes them happy and makes life easy.  Unfortunately, upon further reflection many of the purchases made for immediate gratification reasons are unneeded and costly.  Here are some ways to delay gratification and avoid spending money on things that you really do not need.

Create A Holding Pattern For New Purchases

Before making a purchase, write it down on a list and wait for at least three days.  After this time period has passed, review the list and everything that you still want to buy, you can go ahead and purchase.  People that put this technique into practice quickly find that the “must-have” items of several days ago have lost their appeal and are no longer wanted.  Delaying purchases for at least three days can reduce your spending by a significant amount and you will have less unwanted items cluttering up your home.

Schedule Necessity Spending Only Weeks

Many people purchase unnecessary items simply because they can.  By training yourself to go for a week without spending money on anything but necessities, you can curb your impulse to purchase items that catch your eye and replace it with a new habit of spending money on things that you need only.  With this technique, you will save money and save time by reducing the number of entries in your spending ledger.  Some people choose a specific week of the month while some people attempt to go for several weeks at a time without spending, so try several different methods to see which one would be the most successful for you.

Although the recession has been officially over for some time now, many Americans are still grappling with the after effects of the credit crunch.

However, despite the overall desire to reduce outgoings, there are a number of different reasons why loans could still be required.

Unfortunately for those with a low credit score, loans are far more difficult to obtain that they were prior to the recession, with many lenders opting to scrutinize applications much more closely.

Some people with a poor credit history will find they are unable to access any loans until they have managed to boost their score, whilst others will find themselves restricted to specialized bad credit loans.

However, for those individuals who have a good enough credit score to be able to take their pick of the loans available on the market, now has never been a better time to obtain finance.

Whilst the downgrading in the credit status of the US and the debt crisis in Europe are generally not viewed as healthy, they could be seen as beneficial for those considering borrowing money.

The economic climate at the moment means that interest rates will remain at their current record low levels, meaning that it is much cheaper to borrow money now than it was before the credit crunch hit the US.

One of the possible effects of the US credit downgrade could be an increase in the cost of the country’s borrowing, a cost which would undoubtedly trickle down to personal loan rates.

Whilst this would more than likely be the case for many other countries, Americans could be protected because of the superpower’s previous standing in the credit market.

Although it is true that the US has a large debt burden right now, no-one really believes that the country is suddenly going to fall into financial ruin and US Treasuries have always been seen as a safe haven in troubled economic times.

For this reason, although a longer-term downgrade may cause some increase in costs, it is seen as extremely unlikely by financial experts that government interest rates will rise in the short to medium term.

This is good news for borrowers, as interest rates on car loans and mortgages are often tied in to the government rate and rise in tandem.

Anyone with long term finance that was arranged prior to the recession may even find that refinancing their borrowing could work out cheaper, because the interest rates available in the market now are ridiculously low.

Interest rates are predicted to remain at rock-bottom rates for a considerable length of time, especially as fears over a double dip recession remain, as the government’s priority is encouraging growth into the economy.

A fixed rate loan will be the best option to ensure future repayments do not rise, but these are better taken out sooner rather than later.

Any fixed rate loans will see their rates start to rise as soon as there is any possibility of interest rates going up and will become more expensive some time before interest rates actually move. It is therefore much cheaper to secure fixed rate loans well in advance of any interest rate increase.

When it comes to all things financial, it’s confusing at the best of times. In recent months, Australia has witnessed a number of announcements and changes that may influence you financially.

-          Mortgage exit fees abolished – the government’s decision to ban mortgage exit fees on all new loans came into effect on July 1. It was a move to increase competitiveness among lenders, which will give you greater control over your mortgage and allow you to refinance without being penalised for doing so.

-          Interest rates unchanged – last week the RBA announced interest rates would remain unchanged at 4.75%. This means one less financial thing for you to worry about.

-          End of the financial year – with June 30 gone, it’s time to start thinking about getting your finances back in order. If you’re lucky enough to get a tax refund, consider putting at least some of it towards paying off your mortgage.

These announcements are set to help you save. There are many other hints for saving, especially if you’re in the market for a home loan or have already mortgage.

• Avoid unnecessary fees – there are many fees that you can easily avoid paying. The simplest is ATM fees. Don’t access your money using a bank that’s not linked to your account. Avoid other fees such as parking fees by taking advantage of the “free” period.
• Use your legs – for short trips, leave the car at home. Get exercise and save on petrol at the same time.
• Resist the urge to indulge – it seems like a simple hint, but you’d be surprised how many people don’t follow it. If you don’t need it, don’t buy it.
• Avoid gym fees – if money is tight, avoiding gym fees is a simple way of saving money. Take advantage of Australia’s natural beauty and get outside; go for a walk, a run or a swim. Many parks even have benches and bars permanently set up so you can create your own circuits.
• Make your lunch – whether it be your own lunch, your partner’s lunch or the kid’s lunch, make it at home instead of buying it. You’ll be surprised how much it saves you.
• Your trash is someone else’s treasure – if you have excess pre-loved appliances, toys or clothes lying around the house, consider having a garage sale or putting some things on eBay. There’s no point having things gathering dust when they could be making you some quick cash.
• Utilise home loan comparison charts – with mortgage exit fees on new loans now abolished, take advantage of home loan comparison facilities to see if there is a better home loan out there for you.

If you make sense of the changes and be a little savvy, there are plenty of savings to be made.

Life insurance cover is a sensible purchase for anybody with young children or other dependents – but it can seem like just one extra crippling cost to add to the expenses of bringing up a family. Here’s how to bring down the cost of your cover and secure peace of mind on the cheap.

Be choosy

You can use calculators on sites such as MSN Money to figure out roughly how much you should be paying for life insurance, but finding the best deals out there will be up to you. There are plenty of companies out there who are keen to sell you their life insurance policies. Instead of singing up to the first good deal you see, spend some time comparing offers. Internet comparison sites are useful shopping tools, but you should also sound out some of the larger insurers, such as ASDA Finance and Direct Line, to gauge the current conditions of the market. When you find a policy that seems right for you, it may also be possible to drive the price down further through negotiating.

 Don’t lose on tax

Under current IHT legislation, every £100,000 of cheap term life insurance represents a potential £40,000 tax bill. To protect your family’s money, ask you insurer to write your policy in trust. This will prevent a good slice of your life insurance pay-out from going to the tax man.

Look out for added benefits:

Cheaper premiums may represent limited cover and fewer benefits. Taking the time to think about the exact cover you need before signing on the dotted line is a good way of ensuring your family’s security. For example, good critical illness policies will automatically include up to £20,000 worth of cover for children. Since this is the sixth most common cause of claim, it can be a useful benefit for parents.

Don’t take out unnecessary cover

Before you begin comparing life insurance policies, double-check the cover you already have. Life insurance, income protection and critical illness insurance can be included in employee benefits packages – sometimes under different names like ‘death-in-service benefit’, ‘long-term disability benefit’ or ‘permanent health insurance’.

 Get in shape

The healthier you are, the lower your life insurance premiums will be. By stopping smoking, limiting your drinking habits and losing weight, you could end up cutting thousands of pounds over the lifetime of your policy. Reducing your cholesterol and blood pressure through healthy eating and regular exercise will also help save you money – and it’s not bad for you, either.

Saving money can be a difficult task for anyone, regardless of income, but effortless ways to save more money can be found by simply changing a few habits.  By making some simple adjustments, the amount in your savings account can be increased dramatically without affecting your quality of life or taking money away from necessary expenses.  Here are some of the easiest ways to increase the balance of your savings account.

Bank Bonuses And Raises

Instead of increasing your expenses and spending your raise or bonus, you should deposit the additional funds in your savings account instead.  This allows you to increase your savings without changing your lifestyle or spending habits because you are already used to your current budget.  Placing this money in a high interest savings account will earn you money as well.

Resist Spending Refunds

If you receive a refund for merchandise or services or receive a tax refund at the end of the tax year, resist spending this additional money and place the entire amount into savings.  When people receive unexpected windfalls of money, their first instinct is to think of ways to spend that money.  Saving it for the future is a much more responsible way to handle receiving unexpected refunds.

Auto-Deduct Your Savings

There are several different ways that can be used to automatically transfer money directly into your savings account effortlessly on a routine basis.  Many employers allow their employees to directly deposit their paychecks into several different bank accounts using a percentage or a set dollar amount for each bank account, creating an easy method for splitting a paycheck into checking and savings accounts.  If you cannot do this through your employer, many banks allow the set up of an automatic transfer from your checking account to your savings account on set days of the month and you can schedule these transfers to occur on paydays.

These nearly effortless ways to increase your savings will add to the balance of your savings account quickly and will allow you to save money while still enjoying the quality of life that you are used to.

Thinking that a car is the best means of transportation can be incorrect in many situations.  Over the years, commuting has become a nightmare, especially in urban areas, where numerous people waste frustrating hours waiting in traffic in their car.  Using a car as your only commuting method can be very expensive, with the average commute of 15,000 miles per year costing roughly $8,000 in transportation costs.  There are many commuting methods that may be available to you that are less frustrating and less expensive.

Public Transit

A majority of urban areas offer various forms of public transportation to their residents.  Public transportation may include buses, trains, trolleys, and subways and in most cases, a monthly pass can be purchased for a fraction of the price you would pay for many individual trips.  Riding public transportation costs much less than the gasoline and maintenance costs for a car and you can do other things during your commute, increasing your productivity.

Bikes

A number of urban areas have added bike trails to their cities and biking lanes to their roads to encourage biking from location to location.  Biking is inexpensive, promotes good health and exercise, and is more environmentally friendly than commuting by car.  Cities that have bus service often have bike racks on the front of the bus to allow riders to ride the bus for part of their commute and bike the rest of the way to their location.  Combining public transportation and biking can give you inexpensive access to most areas of the city that you live in.

Carpooling

If public transportation or biking are not solutions for commuting in your area and a car must be used, you may want to consider carpooling to save some money.  With carpooling, you split the transportation costs of your commute with several other people and get to use the lanes reserved for vehicles carrying at least two passengers.  The more people you can get to share your commute with carpooling, the less you will be paying for your commute.  You can join a carpooling club, ask other employees, or carpool with others from your neighborhood who are traveling in the same direction.

When you’re trying to map out a budget plan to get your finances under control, there shouldn’t be any single approach to doing this. It’s very attractive to focus on one way to create a budget, but unless you’re taking extensive action to remodel your life and spending habits, you’re going to find yourself right back in the same situation.

As just one of the approaches to financing and budgeting, there are thousands of apps that can help you reach this goal. Apple and the iPhone get way too much attention when the Android market is getting better all the time. If you have a 4G Slide Android Phone or similar Android device, there are tons of apps out there for you as well:

Personal Budget Droid

This app is a free and simple approach to app budgeting. Personal Budget Droid is very user friendly and you can easily pick it up. It’s important to note that it’s simplicity should not imply that it’s not effective. With this app, you can use a bill tracking system where you can make multiple monthly budgets for different things. You can plan the entire month for housing costs, utilities, groceries, and anything else you can think of. The app has an added feature that allows you to keep a record of all of your transactions, and will calculate how much is remaining in each budget category every month.

Loot

The Loot app will help anyone keep track of the money that they already have and will log every transaction and penny you spend. It’s very easy to use and will give an an electronic record of your checkbook. This is a really popular app on the Android market and gives people the advantage of not having to rely on a bunch of paper. You can create multiple accounts and log any bills that you have paid or need to pay in the future.

Firewallet

Where the Personal Budget Droid is a simple and user friendly application, Firewallet takes a different approach. The application is very sophisticated and allows users to budget various accounts within accounts. It’s comprehensive approach might be more than the average person needs, but it does have a much more intricate and hands-on approach to budgeting and finances. You get a lot more bells and whistles with the graphs and charts that visualize your spending. There’s also a feature that alerts you when a bill is scheduled to come up.

Budgeting approaches are a lot like fad diets: there’s a ton of them and by themselves, no matter how hard you want it to work, it won’t. You should be using these apps as a way to keep track of your spending and get it under control. Concurrently, you need to contact a financial professional that can help you reign in your bad habits and give you a fresh approach to the way you look at your finances.

Follow these guidelines and your finances will be in good shape.  These guidelines are not meant to be indisputable laws or applicable in every situation, but these easily understood principals will give you a starting point for assessing how to handle your particular financial situation.

Retirement Savings:  10% – basics, 15% – comfort, 20% – escape

This rule works well if you start saving for retirement early (while in your late 20s or early 30s).  Saving at least 10% of your income ensures you will be able to cover your basic expenses.  Fifteen percent should be saved for comfortable living while 20% should be saved for early retirement or traveling during your retirement years.  There is rarely a good reason to borrow against your retirement accounts, and never a good excuse for cashing them out so look elsewhere for money to pay debts or buy a home and let your retirement money sit untouched.

Car Purchases: Buy Used And Keep It For 10 Years

This rule can save you tens of thousands of dollars over your lifetime.  You will buy half as many cars as someone that buys new every 5 years and you will avoid the 20% depreciation loss that happens when you drive a new car off the lot.  Cars are better built today and last longer than ever before, so buying a used car is not the risk it used to be.  If you must borrow to buy a car, make a 20% down payment, do not borrow for more than four years and do not agree to a monthly payment that is more than 10% of your income.

Debt Repayment: Pay Off Maxed-Out Cards First

When paying down credit card debt, pay down any card that is close to its limit first, since maxing out cards hurts your credit scores and can trigger penalty rates and fees.  Your primary goal if you carry credit card balances should be paying them off as quickly as possible.

Emergency Savings: Create An Emergency Fund Equal To Three Months’ Expenses

You should have at least three months’ worth of expenses saved up in cash to serve as a cushion against job loss or other disasters.  Saving that much money can take a while and many families have more important priorities to address first so space on your credit cards or an unused home equity line of credit can be used in place of a real emergency fund until you can save the cash.