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.

Making financial decisions which will affect our lives is one of the more important things we do, as it has an impact on almost every other area of our lives, and so it must be done with a minimum amount emotion.

What this means is developing and implementing a plan before emotion becomes a driving factor in the financial decisions we make. If we’re not prepared, then the events we face will drive the actions we take, and that is largely based on emotion when we’re surprised or caught off guard.

This is why setting aside savings to deal with the unexpected is so important, as once you start being driven by unexpected circumstances when you’re not prepared to deal with them, emotions are the key driver, and they can deceive you and leave you down all sorts of paths which aren’t financially healthy or sustainable.

It’s not the unexpected which is the cause of the emotions, it’s not being prepared for the unexpected which causes emotions to get in the way of common sense at times like these.

The problem of course is what happens when you’re working a good financial and investment plan and you’re caught in the process of putting it into action, but it can’t take care of an event which happened?

At this time it’s best to stand back, calm yourself, and reevaluate your overall circumstances. We must strongly resist making any decision immediately without going over everything.

There’s a reason you made a financial plan in the first place, and a reason you made the specific plan for you and/or your family. Nothing in that should change, even if you must temporarily put the plan on hold to deal with whatever has come up to disrupt it.

If it’s as simple as losing a job, and you are collecting unemployment benefits which allow you to only live at a very basic level, you can’t press to continue on with your savings and investment plan if you aren’t able to afford it.

On the other hand, you don’t want to throw the plan out as unattainable either, as that would develop habits which will harm your finances and goals over the long term.

The best thing to do is deal with reality and face the situation that is handed you. Don’t fall into despair where you make decisions which override what you’re trying to do over a lifetime.

Everything is a temporary setback, and it will change. That’s how to deal with emotions attempting to overwhelm you.

If you can get hold of your emotions and manage them, you’ll find all that has happened is your march toward financial independence has only been temporarily thwarted, and when things change they’ll continue on as they were; whether or not it’s through getting a different job, recovery from health problems, or whatever it is that caused the situation to happen in the first place.

Always take yourself mentally and emotionally out of the circumstance you’re in to get an objective look at the overall financial picture. Understand what it is you can or cannot change in the immediate future and the adapt yourself to what you face.

This is vital become emotionally-driven decisions of any sort are usually harmful over the long term, and that includes financial ones. What inevitably happens is you extend the financial pain you’re going through and make it much harder and deeper than it originally would have been.

In the end, you can’t control the unexpected in life, but you can control how you respond to it. Controlling responses deals with being calm and relaxed and trusting in the financial plan you’ve made, even when the circumstances you face scream for you that they don’t work.

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.

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.

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.

You may want to forgo going to a local business for your payday loan needs, as some major banks are now offering that as one of their latest services, and it would be worthwhile to see if they provide lower rates to meet your needs.

Wells Fargo, Fifth Third and US Bank are among three banks now offering the services, although what it costs to use the services at the banks isn’t clear for Wells Fargo and US Bank, at Fifth Third they do have things in place to check out.

For example, at Fifth Third, you can borrow up to $500 if you’ve had a checking account at the bank for at least six months. A fee of 10 percent is the cost of obtaining the loan, which is automatically paid off when you deposit your next paycheck in the account via direct deposit.

Even though the annual percentage rate is still a stiff 120 percent in the case of Fifth Third, it is far less than the costs associated with other providers of payday loans.

A couple of things to consider when taking account using a payday loan service ever, no matter if it’s from a much lower cost program or not, is what is leading you to need the payday loan in the first place.

As the needs can change from person to person, we won’t get into that, but each individual needs to know why they must pay such a high interest rate to get their hard-earned money cashed.

If you can’t change the reasons over the short term, you could start to gradually build up a savings fund so you can cheaply access your money at times like this without the added expenses.

Another option is to use the lowest interest credit card you have (assuming you have one), as even that will be cheaper than a payday loan at the lowest cost provider.

The point isn’t to feel guilty on why you need the payday loan, especially if it’s the only option available for you, but while you’re using them and looking for the best deal, it would be wise to build up your savings so you never have to do it again.

Even if you can only put a little away each check, you are working toward a solution to a problem that will remain long term if you don’t get rid of interest rates hitting you at even the lowest levels of 120 percent or more.

Possibly one of the least products we shop around for is insurance in general. Many people think in their minds that one insurance policy from one company which covers the same thing will also cost the same. You are completely wrong if that’s what you think, and you cans save hundreds, and in some cases a thousand dollars or more on insurance when taking into account all the policies you have.

I remember when I took over FHA loan for a nice home years ago, that I didn’t check much into the insurance side of it, as I was very happy with the overall price, which was included in the monthly payment.

After several years I got the mortgage payment book in the mail for that particular year, and I was shocked as the price had gone up almost a hundred dollars a month.

Assuming it was on the mortgage side and simply an error, I called up the bank and found out it wasn’t the mortgage that had changed or an error, but the insurance company I inherited when I took over the FHA loan, which at the time I didn’t bother comparison shopping for insurance.

Anyway, I called around at that time as I wasn’t going to be hit with an added thousand dollars a year for the payment because of insurance.

So I had some people come out and check out the house and land, and I was surprised to find out not only was the insurance far less than the current offer for the same coverage, but also was less than the coverage I had been getting for several years before. Nice!.

In the end I ended up paying less than I had several years before the new policy had attempted to be put in place.

Bottom line, check every insurance policy you have and call around to find the lowest price you can get. Just be sure you’re comparing apples with apples and are talking about the same coverage, or find out if you’re over-insured, which many times can happen.

Another tip to consider is in relationship to deductables. Now I’ve always been one to take as high as a deductible I can. Now I can do this for my home and car because I know my lifestyle. I don’t live the type of lifestyle that is risky and prone to damaging my property or automobile. So while anything can happen, I’ve never had a problem with the higher deductible, and have saved a lot of money for taking it.

Once you do that over a couple of years, you can even save from the what you would have had to pay and have the deductible set aside just in case an unforeseen or unpreventable accident happens or storm comes that can do a lot of damage to your home.

Adding a few little and relatively inexpensive items to your home can also lower your deductible, such as improved home security measures and fire alarms, etc. These additions can take over 5 percent off your insurance cost and once in place can be used year after year without added expense.

And if you move, don’t assume your current insurance carrier or carriers will be the low price leaders in a new state. I’ve personally moved a number of time, and almost without exception the prices of the policies from companies in one state are less competitive in the new state I move to, and so I shop around again using the same methods mentioned above.

The bottom line is you can save a lot of money by the few simple steps mentioned above on insurance.

Again, the key and trick is to have the discipline and will to take that extra money and put it away for your future.

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.