A lot of people have filed their taxes already this year in the U.S., but if you haven’t, it could be a good idea to go the ‘Recovery Act Tax Savings Tool’ offered by the government to see if there are some things you could be missing where you may save money.

As the government site says, “This tool is intended to be educational. Taxpayers should not rely on it for determinations about their eligibility for tax benefits, but should consult the relevant IRS forms and instructions or a qualified tax professional. The tool provides links to relevant irs.gov and other government resources to help taxpayers learn more about the benefits for which they may be eligible.”

Even if you have already filed your taxes it is a good idea to go through the possible tax savings, as you can easily amend your tax forms if they need to be; especially when it comes to saving a lot of money.

What’s important about the tool is it relates specifically to the Recovery Act, so may not be something you are aware of, and if you have someone do your taxes, they may have be up to date on it as well, or could have missed something. Either way, it’s definitely worth the little extra time and effort to see if you qualify for the deductions.

For example, with the first question you’re asked about, which is relates to your filing status, you may qualify for a $400 to $800 tax credit, depending on if you’re single or married. It’s called the Making Work Pay Tax Credit, which the government says $110 million Americans should be qualify to use.

Another one you could easily qualify for is concerning college expenses for you or your children. Remember, these are in addition to past tax credits, so be sure to check it out when you get there. In this instance could get a credit through the American Opportunity Credit, which is up to $2,500.

You get the idea. There are a number more of these types of tax credits available this year. Keep in mind spending just a little more time each day can save you a lot of money you can then use to build your wealth. This is one of those worth spending time with.

Many people will say the rich are different than the ordinary person, and they would be right, but not in the way you would think.

For the purpose of this article, I’m defining rich in terms of those that have a net worth of about $1 million.

Most of the time when people say the rich are different than the ordinary person, what they’re really doing is thinking in terms of the super rich - the multi-millionaires and above.

But for the ordinary professional who builds their wealth over time to reach a net worth of over $1 million, they are different than us by their strong discipline in financial matters, and practice things just a little differently than the rest of the population, which results in the building up of their wealth.

There are several aspects to what is the discipline among the wealthy which helps them reach their goals, but all of them are products of one thing: they spend just a few more minutes a day going over their finances.

You may not believe it’s as simple as that, but it is. Studies have shown that the average millionaire doesn’t live as differently from the rest of us as you may think, rather their financial discipline is simply a little higher than ours.

But when you add that discipline up over a period of years, it surpasses the average net worth of people not that different from them, who refused to defer their gratifications and ended up living from paycheck to paycheck, even when they make more money than the others.

With that in mind, here are several of the things that emerge from spending a little more time each day taking care of finances. Oh, and when I say several minutes, I’m literally talking maybe an extra 15 minutes a day to check things over and confirm what’s going on. That’s it!

Never buy in season

One of the major practical steps wealthy people take is they never buy products in season. When you buy in season you will not only never get a discount, but you’re usually going to pay more for the item than you normally would otherwise.

So if they want a fan for example, they go looking around near the end of summer when prices are knocked down significantly, and many times I’ve seen those prices cut 40 percent or more from the summer months.

The same with winter clothes or related items. The time to buy is right near the end of spring when people are thinking of gardening and fun in the sun. Again, prices are way low at that time.

Point is, they literally save hundreds, and probably thousands of dollars a year by buying out of season.

Never pay retail price

A similar but different area is the wealthy won’t pay retail price for anything. This is slightly different because there’s always deals to be had, and not all of them are relegated to out of season items.

No matter what though, only in certain circumstances will the rich pay retail.

Know which items to pay for quality for

While the wealthy definitely watch what they spend on, the other trait is they know when they should pay for quality, and one of those areas, interestingly, is shoes.

They want a good pair of shoes and are willing to pay top dollar for them. This is obvious for the comfort reasons, and when the soles of the shoes wear out, they will go to a cobbler to get them re-soled in order to keep the comfort (yes there still are cobblers out there and they cater to this clientele).

Know where all the money goes
 
As part of their spending a little extra time a day on their finances, the wealthy go through what they spend in order to get an ongoing grip on what their spending habits are.

They know it’s easy to get out of control quickly, and spending that little extra time going over receipts keeps them in check. We should do the same.

Frugality

We always hear the word frugality and think of living on washed and dried paper plates or recycled goods we would have no desire to use over again. But with the wealthy frugality is target so they get the best bang for their dollar, and they not only save money, but invest that saved money over a period of years and so generate their $1 million or more net worth.

What most people think of the wealthy are those that live extravagantly, but what they have is the trappings of wealth, and are one step away from poverty, bankruptcy or foreclosure.

In the end, you really don’t know who the wealthy are as I’m talking about them, as they won’t show it in the way some people like to; those you are deep in debt to live the lifestyle they’re showing off. Many of the not-so-wealthy of course do the same.

The bottom line is if we follow in the footsteps of these good financial examples, we can build up a similar net worth over our lives and have all that we would ever need, and in most cases – want.

If you have fairly predictable expenses for day-care or medical needs, there’s a tool you can use called medical and dependent-care flexible spending accounts (FSAs) which offer opportunities at minimum, hundreds of dollars in savings a year.

What’s especially great about these is they’re tax free while you are able to save $250 for each $1,000 you spend on care. that’s not all the benefits of its though. You can also save on your Social Security taxes because you don’t have to pay that when putting away this money either.

Are there any tricks or unintended consequences here which could hurt you financially? None at all, but you do need to manage it responsibly to protect yourself.

While that sounds scary what I just said, in reality all it means is you need to put money into the FSA somewhat conservatively because when the end of the year comes you don’t get back what’s left because of the benefits you get.

This should never be a problem with daycare, and for other medical expenses, you should be able to manage that fairly well from past expenditures on a yearly basis or if there are certain medical needs you have that have fixed costs.

The point is you shouldn’t try to game the system here, because if you put too much in it’s gone. Use it responsibly and you’ll save hundreds of dollars a year, and possibly from a thousand to two thousand, depending on what you pay out.

Why this is so great is you will have to pay these expenses anyway, so it just makes sense to pay for them through an FSA so you can take advantage of this great plan.

Eventually you’ll get a reimbursement check for your taxes. The key is to put it away for savings, which is the reason you use an FSA in the first place.

As always, don’t be tempted to take your windfalls and go spend them as soon as you get the check in hand.

If you want to occasionally reward yourself that’s a real must, just do it on a limited basis and occasionally. Keep the long term strategy in mind and know that if you commit to your savings plan and are responsible with it, there will come the time when you can buy almost anything you want for cash and never feel the weight of debt or spending what you really don’t have to spend.

An FSA is one great tool you can use to reach those savings goals.

There is no big secret to making a household budget, and no matter who you’re talking to, there are basic things everyone needs to do to make it a success. There can be some variations on the budget and words used to describe it, but when you come down to it, it’s pretty much what I’ve listed below.

It’s also what I’ve encouraged people to do that came to me in the past when I was a financial adviser and they wanted to learn the best way to control their spending and manage their finances.

1.

The first step to take is to find out what the monthly average you pay out for all your liabilities. This includes your regular payments you make like electricity, cable, etc. Again, the purpose is to get an actual monthly average and not try to guess what you must pay out monthly.

2.

Next, you want to get a hold on your monthly income. So simply write down all places you draw an income from and what it is. You want to find out if you even have enough to meet your obligations or you need to get another source of income.

3.

Now make a list of your fixed monthly expenses and your estimated expenses. For example, do you service your vehicles on a quarterly basis. Do you expect to have to pay out some money for household repairs sometime soon. Do you set aside a certain amount for potential problems that may arise.

Here you want to at least a some money set aside for these types of emergencies so you don’t get caught off guard and it messes up your budget.

4.

Be sure to list your fixed expenses and variable expenses into different categories so you understand them and know what to expect. Here is where many people get frustrated and can quit because it was easy enough to list fixed expenses, but forgetting to take into account variable expenses can crush you when they unexpectedly arise. Don’t be caught off guard with this.

5.

Add up the amount of income you take in each month along with the fixed and variable expenses. This gives you the actual conditions of your financial health and will tell you the story of what needs to be done to take care of it.

6.

So far this has all been easy. But now you must take the practical steps of using the numbers you’ve discovered to make adjustments to how you’re going to go forward. This isn’t the fun part of a budget, but it is the most necessary part. No pain no gain. Let’s face it, all of us who have too much debt have brought that upon ourselves. Now we must take it upon ourselves to deal with it.

Again, at first this can be a little discouraging, but once you implement it you will get the feeling of being empowered, and instead of feeling you’re always being acted upon, you’re now taking action to manage your finances and your life.

7.

Immediately start to put money away for the purpose of paying down your debt. The credit card with the highest interest rate should be your first target.

Having said that though, if you need a psychological boost, take the credit card with the lowest amount and start paying that off, as it gives you a sense of accomplishment and you can see very quickly your debt load starting to disappear.

8.

Once you begin this, then simply go over your budget on a monthly basis as things begin to change financially for you. As you do, make whatever adjustments you need to make and fix anything that may be leaking through.
 
Just keep repeating this process until you pay things down.

If you’re married or have joint debt with someone else, be sure to sit down with them and get on the same page. Obviously this won’t work with two people going in opposite directions.
 
Finally, use a software program so you can enter all your data and see the results easily. It helps you do get into the budgeting frame of mind and can give you encouragement as you check your progress from month to month.

Remember that the entire purpose of this is to free up money so you have more to set aside for building wealth. Forget that and the budget begins to make you think you’re being cheated, just like a diet can when you see that big piece of chocolate cake you want to get and take a big bite out of.

Just keep the idea or vision in your head of the day you’re free from debt and have a lot of money to invest, build wealth, and spend on the things you need without going into debt.

With the coming of the new year, the recession is expected to continue – no matter what government reports say – and so you should consider a couple of things concerning your savings account you set aside to protect you in times of emergencies.

There are a couple of things to consider in our economic times that will help better prepare you for the near future, that promises to be about the same as it has been for the last couple of years.

Keep in mind that many companies continue to lay off, reports continue to come in that the jobs lost over the last couple years may never return, and the so-called recovery will be a jobless one.

In other words, be sure to keep your emergency fund built up, and during 2010, I would advise you build it up for another several months at least, and if you can, up to a year. If the worst happens and you’re laid off, in these economic conditions you’ll have to assume it’ll take at least a couple months more than normal to get yourself another job. I would think in terms of at least several months more than normal to find a job if you’re laid off or fired; so building an emergency fund to reflect those realities should be part of your financial strategy for 2010.

The second element to take into account is the inflation rate. Already commodities are starting to rise in price for 2010, and the commodities rising in price directly have an effect on regular consumers. For example, oil prices and agricultural products are already rising in price, and that should continue on throughout the year.

While oil and related products are less than 5% of what we pay now, it is projected to reach as high as 6% or more for the year, which historically causes consumers to spend less during those period of times. More importantly, we need to prepare for those realities with our emergency funds, thinking in terms of adding an additional five to six percent in it to protect us during these times of inflation.

How to do that would be to get an accurate count of what your monthly expenses are on average through the year. Assume you’ll be paying an extra 5% during 2010 for living expenses; including oil, gas and food.

If your expenses are $15,000 a year say, and you’re building up a fund to protect you during an entire year, then just multiply the $15,000 by about 5% in order to come up how much more you want to put into the fund in case you lose your job or some other unexpected emergency arises which makes take a leave of absence or quit.

Either way, if you do, and you’re expecting your current emergency fund to take care of you for a year, and the cost of living has risen by 5%, you’ll have less money and time to work with than you originally thought. That’s why we must keep up with inflation to be sure we adjust our emergency fund reserves accordingly.

As far as the job market goes, it doesn’t look good in 2010, and that demands more money to be put away in my estimation, as the time it will take to get a new job could be much longer than normal.

Add inflationary pressures and longer time to find a job if you’re laid off, and you see how it would be wise to add several more months to your emergency fund at least, and if at all possible, I would extend it from at least six months to a year if you can, as the job market is that tough.

An emergency fund is there for you to buy time, and time is at a premium during an economic crisis, and inflation can cut back on the time you have it you don’t pay attention to it.

Many, or probably most, people reading Savings Toolbox would like to have extra capital to plow into a savings program to create a safety moat as well as build up their wealth.

What may surprise some of you, is there could very well be a very simple and effective way for you to do just that with just a few adjustments to your lifestyle. What is it? Renegotiating on the services you buy or rent monthly.

It’s no surprise that not just consumers are struggling during these times, but many companies who offer services which aren’t necessary to survive are also struggling, as people put more money into paying down debt and increasing their savings.

With that in mind, many businesses offering you services are concerned over the possibility you may be the next one to stop using them in order to survive. That’s a great advantage to you, and you should definitely try to use that as a point to start negotiations.

This shouldn’t scare you, as we’re not talking about the type of pressurized negotiations you may see at a flea market or pawn shop.

So how you you go about it to best position yourself for a better deal? First of all you’ve got to decide whether you are willing to walk away from the service if you can’t strike a deal with them. If they you on it and you are found to be bluffing, it’ll do nothing to help you at all.

Don’t be only bluffing is the first thing to keep in mind. If you need more money to put away, be willing to go all the way and stop services if you aren’t satisfied with their answer.

The first step is to attempt to keep your current services if you can and do it at a better price. You could call them and say you’re cutting their services because you can’t afford their price, and then just sit there and listen to what they say.

One thing to keep in mind here is there are some unimaginative and poorly trained employees at times, and they aren’t ready to offer alternatives to you. If you find that, be ready to give them a few ideas, saying you would like to keep their service, you just can’t do it at the price they’re currently charging you. Again, this is in relationship to keeping your current services at a discounted price.

If that doesn’t work, and they simply won’t work with you in any way, then you might ask about lower-level services which can do the same for you, but with less of what they currently offer. For example, less minutes on your mobile phone, less channels on cable, etc.

One thing I did a long time about was get rid of my land-line phone. Why pay the extra for absolutely no extra value or use? Every bit of that savings can be applied to building up your wealth or paying down your debt.

A friend of my recently experienced some tough times and asked for a discount on her rent or she would have to move out. She wasn’t bluffing, and the landlord really needed a renter in the home, so she got a $150 discount in order to stay there. Not bad for a couple of minutes’ work.

This will work better for homes that aren’t part of a large conglomerate. In other words, if your landlord owns just a few homes that he rents, he would be more apt to give you a discount in times like these than a large rental company would. It’s definitely worth the effort, as you have a good chance in these times to secure a better deal for yourself and put extra cash into your pocket on a monthly basis.

In the end, it’s better to get rid of whatever you need in order to secure your future, and there are worse things to happen to you than to cancel your cable or high speed Internet connection.

Just think in terms that it is a temporary situation, and once you get things on track again by paying down bills and building up enough capital to take you through at least six months of unemployment with your current financial obligations, at that time you can simply add some of the perks you had before.

The point is you’re probably leaving money on the table if you have full service on most things. There hasn’t been a time like this in decades where asking for a better deal may be answered with a yes.

If not, be prepared to cancel what is needed to give you the extra money you need to build solid, long-term financial success.

Just be sure to have the discipline to pay down your debt or put money into savings when you do cut back on costs, otherwise it’s all being done in vain.

The Federal Reserve has stated more than once that it has no intention of raising interest rates anytime soon, and that eliminates most, if not all, avenues of generating a decent return on any safe investment.

While we enjoy a low inflationary period during these times in general, at the same time we get almost nothing for a return if we want to invest in some type of cash account.

So whether it’s a savings account, CD, money market account, money market fund, or any other type of cash investment, you’re not going to get much of a return right now, and it doesn’t pay to invest in something long term just to get a couple of percentage points of interest.

There’s no doubt inflation will kick in in the not too distant future, and if you’re invested in something so you can beat today’s terrible short-term cash investment vehicles, you’ll pay for it in the long run when inflation really roars, which with food is already happening, and is expected to increase over the next several years, if not more.

The answer to where to safely put your money right now is in what we’ve already mentioned: a cash account of some sort. All I’m saying is no matter where that is, it’s not going to give you any type of return worth talking about, and in most cases almost zero.

So why bother with even doing it in the first place? First, you need an emergency fund built up to protect you. If you don’t have one, the last thing to be concerned with is whether you can get a little bit more interest for you money. The first thing to be concerned with is to launch a plan where you put away a certain amount each month to build up at least a six-month reserve in case of an unforeseen situation that may happen to you.

Next, we’re not only in an economic environment thinking in terms of making money, we’re also in an environment where preserving capital is just as important. To do that, you have to forget about interest rates when they’re as low as they are today, and think more in terms of preserving your capital.

One psychological aspect to keep in mind is you’re probably doing better today than you were about a year-and-a-half to two years ago when you could get a decent return of five percent on a safe account. The reason is inflation was high at the time, and so in terms of growing earning power, you do as well today as then because there is very little inflation now, although it is starting to go up in some areas, but not enough yet to make a big difference.

It’s not really any better in this particular interest rate environment, but neither is it any worse.

So in terms of low-interest rate investments, think on a short-term basis, because inflation will return with a vengeance, and you don’t want to be stuck with a puny long-term interest rate just because you could get a little better rate today for a longer term commitment of your capital.

I wouldn’t invest in anything over a year, and would prefer something much less than that. Even a savings account or money market accounts may be the best bet because of the needed flexibility to transfer funds quickly to a better investment when rates begin to rise again.

Finally, forget about rates as far as the determining factor in a safe-money savings plan. The point is to get in the habit of putting money away to have emergency funds available. Interest rates are secondary at this time, but that could change when the Fed decides to increase interest rates.

Until that time, there’s nothing to do but keep saving and waiting, as it’s probably going to be a least a year before interest rates go up, and so trying to force something to satisfy your desire to have better interest rates could come back to haunt you when they really go up and you may be stuck with a long-term investment that is losing ground to inflation.

Don’t panic and do something you’ll regret. Interest rates will return in time, and until then it’s best to place your cash in something you can have immediate access to than anything else. Flexibility rules the day in a low interest rate environment, and that’s more important than anything else, other than putting the money into something safe in the first place.

Prepaid debit cards are becoming a booming business as consumers tired of the high banking fees associated with checking accounts flock to the increasingly popular alternative to having bank accounts.

One great feature of a prepaid debit card is you can recharge when it when it runs out of money, so you don’t have to go through any type of process over and over again, other than that one.

The strength checking accounts in banks for some is a weakness for others; the reason the use of prepaid debit cards is growing so quickly.

For example, many banking customers like overdraft protection, because they have a handle on their finances, and they don’t want to go through the bother of being sure they’re covered to the penny if they do some spontaneous spending. So they understand they’ll have to pay for that privilege, and so don’t mind doing it.

On the other hand, those that don’t want to be hit with these fees can opt out of overdraft checking programs if they want, but then they have the issue of stopped payments if they run out of money. So they have to deal with taking care of that on the other side of the issue.

Depending on the lifestyle of consumers and the terms related to using an ATM, that can be an additional expense and headache, driving more people to go the prepaid debit card as their financial tool of choice. There are other elements connected to this, but you get the idea.

In a recent report titled “Prepaid Debit Cards: A Credible Alternative to Checking Accounts,” author Gwenn Bézard revealed that approximately 14 percent of those that now use checking accounts could save from $350 to over $1,800 by switching to a prepaid debit card.

Another interesting practice is people are moving from store cards to prepaid debit cards as well, saving more money because of no interest.

In another report, the savings aren’t near as significant as stated by the first report, as a Britton Woods prepaid debit card study found that savings for replacing a checking account with a prepaid credit card is between $96 and $146 annually.

The reason the figures are so far apart is the Britton Woods study only included basic debit card and checking account use, and didn’t include the numerous services which could add a lot of cost do using a bank checking account. That’s also the case with a prepaid debit card, which could have costs increase depending on what you used it for.

If you’re a good manager of your money and use basic banking checking account services, it’s probably not worth the time and effort to change. If you use a lot of bank checking services which generate a lot of costs and fees, then it could definitely be a good choice for you.

Some people even use both, designating certain types of spending on their prepaid debit card, ensuring they’re saving money by managing their checking account better through using it for specific items and bills.

I’m going to get a lot more into prepaid debit cards, but one nice feature to consider, is an answer to probably the first question in your mind, and that is how troublesome is it to get the card and get your money on it. The answer is it’s very simple, and all you have to do is have your pay check direct deposited into your prepaid debit card account. That will avoid any type of activation fees, while also being able to use them to make online transactions and other business.

I’ve been hearing a lot lately on the woeful return for savings products which are safe, but offer low interest rates. It generates the question for many on whether it’s worth the effort to put money away in these types of accounts.

My take on it is we really do need to continue to put our money into savings. No matter what we’re getting on those accounts, whether savings accounts, CDs, money market accounts or Treasuries, we’re getting the market rate, and whatever that rate is, depending on doing a little research on who is offering the best rates, is all we’re going to get until the market changes.

The problem with some people raising these questions is it could influence someone to foolishly quit saving and waiting around for better interest rates to return.

Why that doesn’t work is the money you have for savings today needs to be put away while you have it. What’s the alternative? Spending it? That makes no sense at all. You don’t spend money you’ll never have returned to you just because interest rates aren’t what you think they should be. Yet that’s just what some people are advocating.

What needs to be put in perspective, is savings rates are never going to be high and will never be the key investment to build your wealth with. Savings is to build up a protective moat for you so when unexpected difficult economic times come, you have cash in place to tide you over while you make decisions and take steps concerning what to do about it.

It’s more about keeping your money safe than it is increasing it. This doesn’t mean we shouldn’t shop around for the best returns we can get, just that we have to understand what savings is. If we have high expectations that aren’t realistic, we could use that as an excuse to not put money away. That would be a huge mistake.

For a number of reasons the Federal Reserve isn’t going to raise interest rates any time soon, and so those waiting around to put money away for safe keeping and in case of emergency will find themselves unprepared if things continue on a difficult economic road (which is expected), with no money to tide them through.

Savings aren’t really to make you a lot of money, it’s to build up a protective money stash in order to give you a chance to work things out if you’re fired, laid off, or some other economic emergency happens which you would need money for in order to buy you time.

In the end, that’s the real purpose of savings, to buy you enough time to right the circumstances without devastating you’re entire life and causing you to lose everything. Interest rates are only secondary to the issue, while having some savings set aside for emergency is the primary reason for having an account.

Don’t let low interest rates keep you from continuing to save. It really has nothing to do with the overall purpose of having a savings account of some type, as I’ve shown you here.

Many people believe that searching endlessly for a small percentage increase in a savings account of some sort, or a bank CD, is the key to building up your wealth in a significant manner. This is unfortunately not true, and depending on your income bracket, isn’t worth the time doing so.

When I mention not being worth your time, by that I mean when people move their money in and out of accounts as soon as a better deal arises, making it a time-consuming effort to track all the changes, as well as making the new deposit and transaction.

By far the most important part of any savings strategy is to make a simple plan, work the plan, and make few adjustments along the way.

This breaks down to finding the best interest rate and looking at the fee structure which could eat into your capital if you don’t manage your account well.

Once you find a solid interest rate, then it’s a matter of working your plan over and over again on a monthly basis. That usually means putting money faithfully into an account to build up a financial safety net, and/or build up a nest egg for retirement.

Just like people who think they’re players in the stock market when they attempt to time the market and in fact, make it look like “they’re a player in the stock market.” In other words, they are trying to impress people, not really build their wealth.

The truth is the majority of savings and other investing strategies should be fairly boring, with nothing much happening over a period of time, other than general fluctuation which don’t mean that much one way or another.

As far as the time factor, if you’re not making some serious money when you spend time transferring funds to a new account because of a better interest rate or introductory offer, it’s just not worth the time. You would need many thousands of dollars to justify it, and even then it would have to be significant enough to pay you for the time you’re spending doing it. Only you can determine if it’s worth it or not.

I’m not saying there won’t be an occasional time to do this, but it should be a higer enough rate to make a difference in your savings, and of course there shouldn’t be any fees for early withdrawal or some other penalty if you’re hunting for the highest interest rates at all times.

When it comes right down to it, consistency concerning making your deposits over a long period of time will outperform those moving in and out of the market, no matter what the investment is.

An even stronger benefit is the mindset you’re developing which will be your strongest financial asset as you work the best ways to build your wealth within your risk tolerance. Sticking to a well thought out plan is by far the best and safest way to save and build up your capital.