One of the most stressful times encountered is when you try to choose a great birthday gift for someone that you love but you do not have a lot of money to spend.  It is possible to find great birthday gifts without breaking your budget or disappointing the person that you are purchasing the gift for.  If you would like to get a great birthday gift for a loved one, there are some things about them that you should keep in mind.

Personal Interests Gifts

One of the easiest ways to find a perfect birthday gift for a reasonable price is to look for gifts that are geared towards the person’s personal interests.  Every person has particular things that they are interested in and tailoring your gift to fit these interests may be the most inexpensive way to get them a gift that they will truly enjoy.  Items that will help them partake in an activity they enjoy, supplies for hobbies, and gift certificates to specialty retailers to replenish consumables are all great ideas for birthday gifts and can typically be purchased for less than $20.

For most people, the subjects that they are interested in will be apparent in their actions or words spoken during conversation.  If you are unsure about which interests you should focus on for the birthday gift, you may want to discreetly ask someone that is close to the person, such as a spouse or parent.  Opening a gift this thoughtful is something that the recipient will remember for a long time.

Homemade Gifts

You would be surprised at how many people would prefer to receive a homemade, unique gift for their birthday instead of the typical shirt or book that most people give as gifts.  If you have a special talent or make a dessert that the person particularly enjoys, you may want to consider giving them one of your creations as their birthday gift.  Imagine their joy when they open a handmade crochet blanket made just for them or a baker’s box containing their favorite pie.

It can be very difficult to save money if you do not have a plan for limiting your spending or increasing your earnings.  Living the way that you have always lived will make saving impossible without a large increase in your earnings and the best way to save large amounts of money quickly is by changing common habits that cost you money.  Here are some simple saving solutions that anyone can use to increase the amount of money available to save each month.

Be Conscious Of Your Energy Usage

Energy costs are a huge chunk of monthly spending and the price of energy continues to increase at an astonishing rate.  Today’s high energy costs make conserving energy a higher priority than it was in the past.  There are many ways that a person can adapt their habits to conserve energy and lower their energy usage including turning off all units that use electricity when they are not in use, running all of your errands in a single trip, walking or riding a bicycle short distances instead of driving.  Consciously conserving energy can save you as much as 35% every month and that money can be put towards increasing your savings.

Brand Names Aren’t Always Necessary

Many people routinely buy name brand items because the name brand items are perceived to be better than their generic or store brand counterparts, but most are comparable in quality.  The price of a store brand item is typically 25% to 35% lower than the price of the name brand item in the same quantity, saving you a significant amount off the total cost of your purchases.

Only Pay For What You Need

There are many different ways to reduce spending without dramatically changing your quality of life.  Some people choose to downgrade from the deluxe cable television package to the basic cable package, saving $60 or more per month while still having a number of cable channels available for watching.  Others choose to save the money that they have been spending on fast food lunches by taking their lunch to work instead.   Any person can find small savings by buying only what is needed and these savings can be used to boost the balance of your savings account.

Long-term, fixed investment in bonds and CDs aren’t something we should consider investing in at this time, as the interest rates in America are going to remain depressed for some time as the Federal Reserve’s decision to keep them low in an attempt to help the economy recover will remain the practice.

That will be reinforced by the inflation numbers, which over the last year have risen by only 2.2 percent, while the Consumer Price Index was up only 0.9 percent, although that of course doesn’t include food or energy. Even so, that’s the lowest increase in 44 years for the CPI.

Add to that the bad economic news from Europe, with their sovereign debt crisis, and China with their own inflation challenges, and the possibility of the U.S. and other economies going backward is a real possibility, which will pressure the Federal Reserve to keep interest rates low, which as far as it relates to safe investing, should keep us in short-term investment vehicles, rather than long term, as eventually interest rates will rise, and we don’t want to get stuck with long-term rates which will under-perform inflation.

It’s not as if that’s not happening now concerning savings, because it is, it’s just that it’ll be much worse in the future if we lock ourselves into low-interest investments, as inflation will inevitably rise, and we’ll lose a lot more buying power if we lock in long.

There’s not much available out there, and we’re talking largely about building a fund to handle any type of difficult circumstance that may come along.

So for now, it’s far better to keep things short-term until we emerge out of the low-interest rate environment. Anything else will cause us to lose our buying power as the value of the U.S. dollar falls and inflation rises.

The one thing about financial or economic news, is it can move up and down from hour to hour, and ultimately confuse a lot of people who don’t understand what’s happening because of the many variables involved coming from so many sources and viewpoints.

With that in mind, don’t get confused when putting away money for savings. For the most part, all that economic or business news has little to do with us at the individual level, and make make us think too much … to the point of rendering us paralyzed financially, or to make decisions based on macro-information which probably will have no effect upon us.

By macro-information, I mean news from around the world which takes into account the larger, global economic picture, and not the local.

Don’t allow all this chaotic news and variety of viewpoints affect the decision you’ve made to set aside a certain amount of money to take care of your needs in case of an unforeseen event which causes you to lose predictable income. Things like getting fired, laid off, injured, etc., which will cause you to lose monthly income.

No matter what happens economically, it’s never, and I do mean never, a bad idea to put away money for unexpected circumstances which can hurt you financially.

Some people give up or tell themselves things like “what does it matter?” or other dis-empowering thoughts, questions or statements, which ultimately create a self-fulfilling prophecy for those who think like that over a period of time, which causes them to stop putting money aside out of fear or feeling it won’t matter.

It does matter, and just remember that all the negative economic news, or even the economic news that sounds positive, is usually referring to circumstances of a country, or region in the world. Most the time it won’t have a direct impact on you, and even when it does, it’s usually in the loss of a job or hours being cut back, i.e. your income stream is either lost or diminished.

Either way, having money set aside is the best way to prepare for it, and no matter what happens around the world, or what economic news is reported, those who are prepared by having savings will be far better off than those who live from paycheck to paycheck with no backup funds.

So regardless of what happens, continue to sock away money for the times that could come where you’ll need to draw on your own money in order to continue living as you’re accustomed to.

Don’t let economic news – one way or the other – determine your savings plan or practices. Make a plan and work the plan, and forget about the big picture which at worst, will only have an indirect effect on your personal finances.

There will always be economic ups and downs which have the potential to disrupt our lives, those best prepared for those times are those who continue to save and build their wealth during those economic swings, largely ignoring the bigger picture and focusing on their own little economic corner of the world.

Sometimes the idea circulates concerning money management that prepaying your bills is a good way to get your credit rating higher.
That’s a myth. And in reality it can take away some extra money you otherwise could earn if you practice prepayment.

The reason it’s not a great idea to prepay bills is it takes away earning power from your money on a monthly basis, or whatever payment structure you’re under.

Keep in mind that savings and building wealth is done over a period of years, and every time you remove an element of potential earnings from the picture, it can multiply many times over throughout your lifetime.

For example, if you prepay your bills every month, the interest that money could earn is taken away from you. Multiply that over the years, and you can see how significant the amount can become.

Of course this doesn’t mean you should allow bills to be late so you incur penalties, as that’s just as bad as the other.

The point is that managing your wealth building involves a variety of steps which practiced over a period of time can generate significant results.

The same is true in the reverse. Losing a little here and a little there from even interest rates takes thousands away over the years, so doing a lot of little things right and with discipline produces the results all of us hope for and want.

So while paying your bills early sounds responsible and right, it is one of those little things that can hurt you over the long term.

Keep your savings money in an interest-bearing account at minimum, and only use it close to when the bills are do.

I do this on a monthly basis, waiting for the 1st of the month to transfer money for bills into my checking account.

The idea that doing it early helps your credit isn’t true; just paying your bills on time is what is needed.

Here is just one little thing you can do and change to add to your money-management strategy to help you reach your financial goals.

There only a couple of reasons to keep our money in a low-interest savings account, one, to have immediate access to your money when unexpected circumstances arrive, and two, having it parked while you wait for quality investment opportunities to put you capital to work.

Now the first one is obvious and what we talk about all the time on Savings Toolbox, offering numerous encouragements and strategies of how to be sure you’ve got that safety account ready to protect you when you need it.

The problem with many people at that point is they tend to keep filling up these savings accounts with money because they aren’t sure what to do next.

Well, once you have reached your savings goal for the purpose of having a safe financial cushion to work with, at that time it is important to move out of the safety mentality into an investment mentality.

It’s a perfectly good strategy to have your safety money in a low-interest bearing account because it’s purpose is to buy you time when unexpected financial emergencies arrive; it’s purpose isn’t to build you wealth with solid returns, but to protect your wealth in times of trouble, by not forcing you to tap your important investment money.

The biggest challenge once you have you money set aside is to change from a safety mindset to a wealth-building mindset. Neither one is right or wrong, they just need to be applied in the right circumstances.

Probably the biggest reason we keep funds in low-interest accounts is they’re the simplest and most easy to understand, the most safe, and we tend not to want to change what we’re doing, as familiarity becomes a friend we don’t want to abandon.

The point of this article isn’t to come up with investment ideas concerning what to do with your money once you have a financial cushion, rather it’s to help you move out of one mindset into another, so you will start to break out of your pattern and into a new one.

Once you reach you savings goal there’s no reason in the world to continue adding to it. The major reason for that is because inflation will eat away at its buying power and you’ll never build wealth with tiny interest rates.

This doesn’t mean to panic and move your money for the sake of moving it, what it means is sit on that money available for investment with an eye toward waiting for the right deal to come along. Once it does, then pounce on it.

Savings accounts aren’t ends in themselves, they should only be a holding place for money waiting for good opportunities to come along. Excluding your money set aside for crises, there should be no other purpose for putting and holding money in a savings account other than for the purpose of investing it at opportune times.

In a couple of reports recently released from the U.S. Small Business Administration, the findings were over 50 million people working in the American workforce don’t have any type of employer-sponsored retirement plans, and of those offered them, over 50 percent don’t bother enrolling in them.

Now this is look upon as a big deal by the government study, but for those of us looking to increase out savings and build up a retirement fund, the importance isn’t what particular vehicle we use to build it up, but rather that we have plan in place we consistently contribute to.

First of all, let’s very briefly not that while the numbers above may be accurate in general, they don’t necessarily reflect the reality of the situation. Many government studies like this don’t delve deeply into what is happening, and can give a distorted view of things. For example, many people included in the study have a spouse which is building up their retirement through their workplace, and so the other spouse doesn’t use their particular fund, nor care about doing it. That skews the numbers, and changes a lot of the ominous feelings associated with it.

Another factor could be many people are saving on their own and investing some in a way that they aren’t attracted to a retirement plan offered in the workplace. I’m like that, but then I know a lot about investing and savings, and have the discipline to do it.

What I want to get at in this article is no matter what savings or investment vehicle we use to build our retirement fund or our cash on hand in case of emergencies, we must take charge of that strategy and own it. Nobody cares whether you’re prepared or not, and if we don’t take charge of our finances, nobody will.

Even if you do have an employee retirement plan you have entered into, you must make decisions on how you want you capital dispersed in it, in the sense of the level of risk you’re willing to take and other factors related to it. Do your homework even here, don’t just let someone else make the decision for you.

A basic rule of thumb is the younger you are the more risk you can take. While the older you get the more the term safety should be part of your practical investment strategy.

If you’re the type that has no discipline whatsoever in finances, then if you’re offered a chance at a retirement contribution through work, that would probably be the best way for you to do it.

What I’m saying is it’s not necessary to have that to build up your retirement fund, especially if you’re not offered it through your job or you don’t want to participate in it.
 
Again, it’s more important to have a plan you’re consistent in contributing to than what that plan is.

Many people say they aren’t able to afford giving to a retirement plan. Okay, if that’s you, just take a few dollars a month and start in a money market or savings account at your bank. Just don’t do nothing, as it creates habits that are hard to break even when you do generate more income.

Something is better than nothing no matter how small the beginning is. This especially true in building a retirement savings fund. If you don’t take charge of your financial future, there is no one else out there that will bother to take the time to do it.

If you don’t think their are consequences to your actions, look at the sovereign debt crisis of Greece to see that it can extend to an entire country, and possibly continent, when certain behaviors multiplied times millions of people bring about the same result as a single person or couple going into debt can do.

I say continent above because there is a possibility that a number of these countries could bring down the euro if the credit fiasco extends to them, which is a very strong possibility.

These things are brought up to catch your attention. In America there are already major cities bankrupt, and California is on the verge of falling, which is a larger economy than most countries in the world.

This is isn’t to make you fear but to sober you up a bit on the condition of your finances. Many of us, even after what has went on the last several years, just don’t think something like that could happen to us. But it’s not just happening to poor people, but to all economic strata’s in the U.S. and other countries.

What is the bottom line for all of this? No matter if it is a continent, nation, state, city or individual, excessive debt is nothing more than spending beyond your means, or to such an extent that any unexpected situation will bring you down financially to the place of bankruptcy or complete insolvency.

The major lesson to learn from the Greece sovereign debt crisis is you can’t continue to pretend that it’s something that will just go away. Those heavy in debt are only one economic downturn from being exposed that they have over-spent.

Thinking negative times are just short term and you’ll rebound when an economic recovery begins is no different than rolling the dice and hoping the right numbers come up. In other words it’s gambling, and we’re all in a period now where those that have gambled are losing.

This is one reason to put away a nice chunk of money for savings. A nest egg protects you from prolonged negative economic circumstances and events which weren’t expected. But if you’re so deep in debt any long-term economic downturn can hurt you, then even a large nest egg may not be enough to save you, as many are finding out now the hard way.

If a state, country or continent has the risk of going bankrupt or defaulting on their debt, so can you be at risk. Even if you’re in a solid financial position, it’s a good idea to keep on top of your debt and refrain from going any further into debut until you’re in a much strong financial position.

As many Americans are practicing now, is the time to build up your cash reserves and pay down your debt. Forget about the stupidity of the U.S. government – which is close to going bankrupt itself – telling you to spend your money as if it’s some type of patriotic duty.

Now is a time to hold on to your money and build your cash foundation up and, as mentioned above, pay down your debt. Nothing should be more important to you than that concerning your finances.

I’m going to say something that will challenge almost everyone that isn’t aware of it, and that is a job will never be enough for building wealth, and those that think they can get wealthy by getting an increase in pay, are in for a big surprise, because it doesn’t work.

In saying this, I’m largely talking about the Western world, as those living in countries like Japan and China do have significant savings, and they put it away at whatever level they’re at in wages, at least for the majority of them.

The secret to savings and building wealth will never be getting a higher wage or salary. Why? Every time someone gets a higher wage or salary they move up what they consider the economic ladder, and they will buy a more expensive car or home, which eats into whatever benefit they got out of the raise they received. Other items can of course be included with that, but a car or home will be the largest expenses paid for, and those will be bought using debt, which the higher loan will result in a higher payment. It’s as simple as that, and it’s a proven lifestyle choice of most of those living in the Western world.

Don’t get discouraged if you don’t make as much as others, as high-end professionals participate in the same economic behavior, including doctors and lawyers, who live from paycheck to paycheck like many other people do, just in a more expensive home and driving a more expensive car.

I bring all this up to say that you don’t need a larger check to get going on savings, because more than likely, not long after you get it you’ll end up going to a better car or home, which will bring you right back to where you were, with the exception of the car or home.

You may say, “but that means I’ve improved myself.” You would be wrong with that assumption, based on the mortgage fiasco over the last several years where people ended up in homes they couldn’t afford.

Remember, when it comes to savings and building wealth, it’s not the size of the paycheck but the consistency of investment over a period of time that makes it all work.

Whether you’re faithful in putting away $50 a month or $500 a month, if you do it over a period of time without changing your habits, you’ll end up with a nice chunk of money. Many times we hear about people with very low incomes putting away over the length of their lives and leaving millions to people or charities as a result. It wasn’t the size of their paycheck but the size of their commitment that made that possible.

Is this to say a larger paycheck can’t help you? No. But it means that the majority of people take a larger paycheck and spend it by moving up to the next level. If you get a larger paycheck and put it away at levels you have been, of course you’ll build your wealth far quicker than you would have otherwise. What I’m saying is you’ll be in the majority if you have the discipline to do that.

What I’m trying to get you to take away from all of this is if you focus on the size of your paycheck, you could end up using that for an excuse to wait or develop habits of getting what you want when you want at the expense of building up your savings and wealth.

Waiting for your paycheck to get a certain size won’t work because of the habits you’re developing. Once it gets to a certain level you can be sure you’ll wait for the next increase as well.

Don’t get caught in that trap. Make a plan and commit and work with it. If you get more income coming in, at that time adapt the plan, and do the same over and over again. Waiting for the perfect income level never works, because that time never comes once you start to look at finances that way.

For most of us desiring to increase our savings, it can’t be done with huge windfalls of cash made available to us, but must be done one step at a time with little amounts set aside to build up over a period of time.

This way to save absolutely works, and is probably the best way to save for the vast majority of people, yet there is a major challenge in doing it this way, and it’s largely psychological.

First lets look at the negative side of it. Say you have a hard time having the discipline to put money away for savings, but finally get the will to commit to it. Maybe you only have $20 a month to put away.

After five or six months, you of course are closely watching your savings add up, but then you check your account out and you’re only up to $100. That could be a devastating and dis-empowering figure, depending on your background and way you view money.

If you’ve never been able to save, that could be a huge triumph, but if you have had access to a lot of money in the early part of your life, but are now struggling to get a savings plan in place, you could feel like you’re completely wasting your time and just forget about keeping on with your savings strategy.

This isn’t anything new for a lot of people, but it can cause you do quit and start over again and again, similar to what many people do with a diet to shed some pounds.

Contrary to what most of us hear about life and general and savings in particular, is for the most part it is incremental, and change and success comes one step at a time, added up over a period of time.

So first we need to understand this is the way of life, and those that contradict this are either lucky or have something unexpected happen which isn’t the norm.

What this means is we can’t look at what other people are doing, or even if they are bragging they are doing great in their finances. Many times it’s not even true, but even if it is, whatever they’re doing is working for them, but your circumstances could be completely different.

Don’t get caught up in the comparison game, but focus on and stick with your strategy.

The positive side is if you stick with it over time, you’ll find a nice chunk of cash being built up and a nest egg ready to help you and build upon for the future.

Savings on an incremental basis is really the only way to go, and don’t try to copy those that say they’re making a fortune while you’re only generating a small amount for yourself.

More than likely, if they’re really doing that well, it’s because of an anomaly and not because of things they’re doing which built their savings up.

Incremental is hard to implement because you can get discouraged or believe some of those that assert they’re some type of investing genius and building their wealth much faster than you are.

Ignore them. More than likely it’s not true, and even if someone were that good, they couldn’t be copied, so don’t try. Just stick with your plan and slowly build your wealth up.