Stopping the Senseless Spending

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Today, I will discuss the importance of how we should stop any senseless spending. We all probably have a different definition of what “senseless spending” is, however the fact is that it exists, and most of us tend to do it.

As humans, we have the tendency to spend our hard earned money on goods and services we do not need. Call it what you may; it can be impulsive shopping or just indulging in what the world has to offer.

With that said, it is important to realize that it is not just one habit or item that we have to cut out of our life in order to accumulate wealth. In order to become wealthy, one must adopt a disciplined lifestyle and budget.

This means that people who are looking to retire well in the future have to sacrifice now, in order to benefit in the future. This can be anything from eating out less, traveling less; in general cutting back on unnecessary expenses.

Keep in mind, this does not mean you have to stop having fun altogether, however you have to do everything in moderation.

If you can start saving young, you stand at a better chance than most as you can save a great amount with only a few adjustments to your spending habits.

Set a budget, and stick to it. You will find yourself living the best of both worlds. You will be able to have a life, and save for your future to enjoy an even better life.

You will find yourself saving so much more money once you erase the senseless spending. Take it in moderation; let go of a few things in life slowly and soon you will even wonder why you did them in the first place.

Saving with Ease

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Saving money can be much easier than one might expect. My brother found this out recently, after making a small adjustment to his account.

My brother can be considered a frivolous spender, he hardly saves, and if he ever saves, the money is used up before you know it.

About 8 months ago, my brother came seeking advice as to how he can start a savings. My first response was that he should stop spending so frivolously, and start working with a budget.

Knowing him, he would not be able to stick to anything; therefore I introduced him to a program TD has been running called TD’s Simply Save.

This program allows you to automatically deposit money into your savings account every time you use your debit card.

He decided to the deposit amount to its maximum, and after 8 months he checked his savings account and found a nice sum of money.

The beauty of this program is that you do not have to do anything to save aside from initiating the program. You simply spend your money, and you are saving simultaneously.

This is perfect for unmotivated savers; some people find it difficult to come up with a goal to work towards. This program allows you to save money despite not having a goal.

For those who are finding it difficult to save money at this point in their lives, you may want to consider using this type of savings program. It is efficient, and will definitely got the job done.

Preparations for an Expensive Month

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July tends to be an expensive month for me; I have 4 close friends birthdays within the month, and each of them set plans for their own extravagant party.

One may want to go away with his friends for the weekend, while the other wants to go to a nice restaurant. In the end, you will have great memories, but a very empty wallet.

What I find myself doing in preparation for the month of extreme spending is cutting back in certain areas of my budget.

By doing this, I can take the hit of spending a lot of money that month, without going over my budget.

You may be wondering where would you take from your budget, when your budget maps out your entire spending. The answer is far easier than you may think.

You simply need to cut back on entertainment costs, and eating out costs. Once you do that you will find yourself having plenty of money to contribute to your entertainment costs in your expensive month.

I did just that, and even found myself spending less than I anticipated.

With a bit of preparation, you can accomplish even the most daunting of tasks. For those who may not do this, and end up going over budget, you need not fear.

You can make up for your overspending by adjusting your budget in the coming months to compensate.

This is one of the greatest parts of having a budget. You can easily set up where your money goes and know what you will be doing with it throughout the month.

Remember, a budget is only good once you carry it out. If you spend the time to create one, be sure to take the time to use it.

Planning Ahead Saves You Money

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With everything in life, proper planning cannot only save you time, but money. Keep in mind, just because you are planning ahead, it does not mean that you must eliminate spontaneity from your life.

Placing logic within each purchase will result in you saving far more money than you would realize.

It is very easy to apply the principle of planning ahead for any big purchases. For many of us, saving and planning for large expenses such as houses, cars, or even vacations is normal. We do not want to overspend on a vacation that can potentially cost half of what it actually is.

For purchases over $50, spending as little as 5 minutes to make sure you are getting the best deal possible, and that you can afford the item can be the difference with saving money and not saving any money.

The issue that can come up is that after you make your purchases, you later realize that the money could have been put towards something better, such as saving or even paying more off on your credit card bill.

One way you can take into account for any spontaneous spending is to keep a certain amount of cash on hand. Have the amount placed in your wallet at the beginning of the month, and once you spend it, its done. You do not put more money back until next month. This will allow you to be spontaneous, yet not at the same time. You are controlling how chaotic you can be with your finances.

Well, you still need to have a certain level of discipline to follow this, however if you already follow a budget, then this is not hard.

Planning ahead can make a big difference with your expenses, give it a try and see the results.

Creating a Financial Resolution

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As we reach this time of the year, we come across a time where many New Year resolutions are created, however realistically there are just as many, if not all are broken before the New Year is finished.

In this case, I am speaking in particular to your personal finance, and what you can do to improve upon it by sticking to one goal in mind.

Creating a financial resolution is great for anyone, it allows you to make a serious change to your finances. However the fact is, sticking to your financial resolution takes dedication.

Not everyone may decide to even both creating a financial resolution, however it is definitely something you may want to consider. By taking the time to create one, you will hopefully be pushed to follow through with it. Even if you only make it a few months, it will definitely have an impact on your personal finances.

When you are creating your financial resolution, consider what was the hardest for you to accomplish in respect to your finances; whether it was creating a budget and sticking to it or lowering your debt levels.

To help you get started on creating your financial resolution, here are a few ideas:

  • Spend less on luxury items
  • Avoid buying unnecessary things
  • Build an emergency savings
  • Look for better deals
  • Create a budget
  • Decrease level of debt
  • These are just a few ideas to get the ball rolling. Look forward to what I plan on improving in the New Year, and how I plan on getting the job done.

Can Money Buy Happiness?

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A question that has been plaguing people for centuries is whether or not money can buy happiness. In most cases, people tend to believe that with money in their pockets they can afford everything they want and in turn they will be happy. However, there are definitely some things that money cannot buy.

In my opinion, I believe money can make a person’s life easier, however it does not necessarily mean it can buy happiness. Money cannot buy a person’s love, however it can definitely attract a crowd of people who are only around solely because you have money.

In a study released by the Royal Bank of Canada (RBC), it revealed that less than half of Canada’s millionaires become happier as they accrue more wealth. The reasoning behind this is that having more money tends to mean that there are more problems.

Millionaires have to often worry about handling their wealth, which includes their savings for retirement and succession planning for their businesses.

Despite what I have said, it is not like I am a millionaire to actually explain how it feels, what has been said is more of my idea of what may happen. Most of it is from what I have seen. In most cases, when people reach a certain level of wealth, they do not even have time to enjoy what they have earned, and by the time they can actually enjoy it, they are at an age where they may only be able to do a limited amount of activities.

What do you think? Can money buy happiness or not?

Avoiding Unnecessary Bank Fees

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Recently I went through my bank account and found I have been charged unnecessary for several reasons. When you think about, it is likely that every Canadian has been charged for an unnecessary fee at least once in their life. You may or may not even be aware that it happened to you.

These fees are definitely ones that we can avoid with a bit of planning, ultimately keeping your money in your pockets.

By keeping an eye on the following points, you should be able to avoid unnecessary fees:

  1. Overdraft Charges

You should not be using your overdraft unless it is an emergency. Dipping into your overdraft because you cannot remember

  1. Cash Advance Fees

When you use your credit card to withdraw cash from an ATM, you are charged a banking fee, not to mention your credit card’s cash advance fee. To top things off, you will have to pay back the actual amount you took out, with the full interest rate being applied form the day you withdrew the money.

  1. Foreign ATM Charges

This is definitely an unnecessary fee everyone faces on multiple occasions in his or her life. Realistically, there is hardly a reason to use a foreign ATM, especially when you are paying extra fees to access your money. It is a waste of money, and if you can avoid doing it, then I recommend that you do.

  1. Bank Administration Fees

There are a lot of little charges your bank will place on your account for what may seem the most mundane of services. A few include not keeping a minimum balance on your account, exceeding the number of total transactions allowed, etc.

  1. Bouncing Cheques

There is no reason your cheques should bounce, other than the fact you actually have no money to cover them. Many of us consider keeping our money in a high interest savings account, however the fact is remembering to transfer the money or coordinating between the banks’ schedule can become an issue.

Avoiding these things will allow you to easily save money, and put it towards any financial goals you may be working towards.

Adjusting your Saving Habits

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Over the past few weeks I have been contemplating my savings habits and what I could do to improve on them.

I will not lie, I was definitely stuck on the topic for quite some time; I am not saying that I have the perfect saving habits, but I did feel I had relatively great ones that suited me.

In the end, the factor I found I needed to improve upon was the amount I was saving, and my spending habits.

Normally, money is taken out from my account and placed into my savings account. I do increase the amount occasionally, however as you may remember I only adjust the figure once I have adjusted well to my current budget, and it is at the point where there less money being spent every month.

How did I adjust my saving habits?

As I said, I decided to improve on the amount I was saving and my spending habits, which is aimed to help increase my savings amount.

Rather than increase the amount I was saving every few months, I have decided to increase it every month. It is pointless I wait so long in the year to increase my savings amount, just because I took longer to adjust to me new budget.

When it comes to my spending habits, I plan on cutting my entertainment costs. At this point in my life, I tend to prefer to hang out at home with a few friends than going to clubs and bars every weekend, throwing away money.

This is not to say that I plan on becoming a social outcast and not going out at all, but I will not leave it at a monthly occasion at most, at the very least once every two months.

How do you plan on adjusting your saving habits?

Sticking with your Financial Resolution

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With the New Year approaching fast, we come at a time where people think on a New Year’s resolution, which hopefully can change their lives for the better. In respect to our finances, Canadians are optimistic about their financial situation in 2011, and are taking action as to how they can make positive changes.

The top 3 answers when asked about their financial resolutions for the New Year is:

  • Spend less and avoid buying things I don’t need (53%)
  • Look for better deals (38%)
  • Build up savings to cover at least two months of living expenses (30%)
  • Realistically, it is much easier than one might think to actually follow through with one of these financial resolutions, and it is definitely possible to follow through with all 3 of them.
  • Whether you have created a financial resolution or not, here are 3 tips that will help you improve your finances:
  1. Live within your means

To live within your means you have to spend what you can actually afford, and not be overzealous with your spending. Stick within a suitable region of your spending and you will be able to spend and save simultaneously.

  1. Set up an automatic savings

By setting up an automatic withdrawal you allow yourself to build a small savings without doing much at all. You will allow yourself to save money as frequently as you want, before you have a chance to spend it. This way you can save for a rainy day, for a vacation or any other goal you may have in mind.

  1. Know what you want and what you need

This is probably one of the best tips you will hear. Differentiating between what is a necessity and what you want is very important. Evaluate each purchase, and decide whether it is a necessary for you to continue your daily life, or it is just something you want. Do not get me wrong, once in a while you may go off track and make a purchase based solely on instinct, remember that we are only human it does happen once in a while.

Taking Advantage of Year End Tax Strategies Part 1

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The year is coming to a close, and before you realize it we will be in 2011. It is that time of the year where we need to look at out finances, and talk with out financial advisors on what we could do to take advantage of year end tax strategies.

With that said, today I will start a mini-series that will cover what one can do to maximize your returns for next spring. Successful tax planning is an ongoing process; there are definitely a few year end strategies that individuals and families should be considering as we hit the end of the year.

The first tip to be shared is easy, all you have to do is spread some joy.

As many of you may know, December 31st, is the last day one can make a donation and get a tax receipt for 2010. Keeping that in mind, you can gift publicly traded securities, mutual funds or segregated funds with accrued capital gains to a registered charity. This will entitle you to a tax receipt for the fair market value of the security or fund that is being donated. This also eliminates capital gains tax as well.

By making a donation, you can not only maximize your return for next year, but you can also do a good deed for the charity of your choice. Remember, if you do decide to make a donation, be sure to make it before December 31st as you can get the tax receipt needed when you file your taxes next year.