Saving Money Today: Just a Dream?

How many times have you and your friends mentioned that some day in the near future you’ll get your finances in order, you just need to get a better job? We all have some hang ups with money. Some worse than others. However do you ever wonder why so many people to reach their dreams? Many times it has to do with barriers.

What if I showed you how to overcome the most common barriers when it comes to finances? Do you think you’ll be able to achieve your financial goals?

“I’ll Lose Money”

Most people have loss aversion, meaning that people would rather avoid losses than risk a chance to make gains, even big ones. I know people who don’t invest in the market because they’re afraid of picking the wrong stocks and losing all their money.

Solution: Start conservative and build from there.

If you’re too worried about jumping into the market now, then start with a target fund based on your estimated retirement date. Don’t put a lot of money in. Check to see if your company offers a 401(k) match. Put enough to get the match; you’ll be getting free money from the company. Use that money to experiment with while you put your money into the target fund. As you get more comfortable look at other investing options.

“I Have to Have Perfect System”

A big fear for many is not having the winning formula right away. I completely understand that. Fear of failure can be huge. I will tell you right now that no one has the perfect system. Things change and so we all have to adjust our plans from time to time.

Solution: Start with one thing.

Instead of trying to pay down debt, get an emergency fund up, and invest in your 401(k), pick one goal to hone in on. If you have several credit cards that have debt, choose one to start off. Once you have success in one ares, then move on to another goal.

“I Don’t Have Any Money Left to Save”

I’ll admit that I had this hang up a few years ago when I was in debt. After paying my bills I always found little or no money left in my bank accounts.

Solution: Deduct savings first. Fight lifestyle inflation.

This seems a bit irresponsible considering necessary bills are vital. Hear me out though. If you can even deduct a small amount (a mere 5% for example)  from your take home pay before the bills are done, not only will you be saving money, but you’d likely still have enough money to pay your bills.

Another culprit is lifestyle inflation. In fact I bet that many readers have this problem than the others.

What is Lifestyle Inflation?

Lifestyle inflation can happen as your expenses increase along with your income. Maybe as a college student you were extremely frugal and only went to the movie theater during matinee hours. Now with a better job, you and your friends head out every time there’s an interesting movie released. You’re not living large, but here and there, your regular expenses have gone up.

Lifestyle inflation can become a problem when it hinders you. If your income decreased, could you weather the recurring monthly expenses? Have you been able to save money for emergencies, vacations, or a down payment on a car? Why not? How can you adjust your monthly spending plan?

Being Smart About Lifestyle inflation

I’m not saying you shouldn’t enjoy some of your hard earned money now. I think it’s unrealistic to just tell people to spend less. I want to share some tips on how you can go ahead and get your spending under control. You can take what you need from the list and use it for your own circumstances.

• Define your priorities. What bills have to get paid (rent, food, transportation)?
• Adjust expenses by a little bit. What bills can be adjusted (downgrade the cable bill a notch)?
• Find at least one big win. Could you dramatically save a big chunk of money by shopping around (like car insurance)? Can you get rebates on purchases you made recently, like a new cell phone?

Do you think you could decrease your spending if you were in a tough spot? What do you recommend people do first?

Psychology of Money

Looking at passive and active barriers and how to tackle them can help you increase your net worth.  Curious to see what affects your money making (or losing) decisions? Check other posts in the Money & Psychology series:

• Choosing Friends to Build Your Net Worth
• Decisions, Decisions – Making a Big Purchase
• Is Saving Really About Motivation?
• Ways We Spend Money Without Evening Knowing It (and How to Fix It)

What have been some hurdles for you when it comes to saving money? What helped you to succeed where you had failed before? How long did it take for you to reach your savings goal?

Photo Credit: jollyUK

Good Morning Green Panda Friends.  I hope you all had a nice weekend; it was extremely hot here this weekend which definitely confirmed that summer is here.  I always get excited when the sunshine comes out and the temperature rises because that means it’s time to take a summer vacation.  If you are like me then you look forward to your summer vacation all year round.  I like to take one summer vacation per year, but where I go and what I decide to do depends on how much money I was able to save throughout the year.

Throughout the year I save a certain dollar amount from each of my biweekly pay checks via an Automatic Savings Plan.  This is a forced savings plan that automatically transfers money from my checking account to my savings account on a biweekly basis.  Since the transfer is done automatically I don’t ever miss the money because it is already withdrawn from my checking account before I wake up on pay day. A benefit of an Automatic Savings Plan is that the money is transferred without any effort from us; therefore there is no chance of us making excuses not to save our money.

Saving My Money in a High Yield Savings Account!

Every two weeks I save my money in a High Yield Savings Account.  Savings accounts are a good idea in theory, but in reality they don’t pay a lot of interest. The purpose of a savings account is to set money aside in a separate account from our every day checking account.  We always want to have access to this money, but we still want to earn interest on the money that stays invested.

Savings accounts are intended for short term investors, if you think that you may need your money in less than two years then a savings account is the right investment choice for you.  However, if your savings goal is longer than a couple of years you may want to consider fixed income investments such Real Return and Mortgage Mutual Funds or Bonds.

My Automatic Savings Plan is directly invested into my High Yield Savings Account.  This is a type of account that is only available for self serve transactions such as online banking or telephone and ABM transactions.  In return for the lack of personal service financial institutions offer a higher interest rate on our money in a High Yield Savings Account.  ING is currently offering 1.50% on their High Yield Savings Account, and Ally is currently offering their High Yield Savings Account with no required minimum balance and no monthly maintenance fees.

Why Are You Saving Your Money?

The amount of money you save depends on why you are  saving your money and how you are planning to spend your money.  I definitely believe in saving a percentage (usually 10%-20%) of our pay check, but only if we are saving our money for a purpose.  Some of us may be saving in case of an emergency, some of us may be saving to buy our first home, and some of us may be saving for a major purchase such as a vacation.

The intended purpose of saving my money is always in hopes of taking a vacation. However where I go depends on how much of my savings actually remain in my High Yield Savings Account.  The intended purpose of saving my money is always planning for a vacation but throughout the year emergencies may come up which cut into my vacation savings.  The last major trip I took was to Spain in 2009.  This year I am going to take a mini 4 day vacation in New York City.  But next year in June I plan to visit Naples Italy.  I can’t wait and I am doing my best to save my money for my next Euro Trip.

Photo by Images of Money

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A relationship with our bank can be one of the most important relationships that we have in our life.  The key to a successful banking relationship is to start young, be loyal to your bank, and always try to deal with the same personal banker.  The relationship that we have with our bank can help us with everything in our financial life from having fees reversed to having our mortgage approved.

We have to understand that our personal banker cannot work miracles; they can only try to help us as much as possible. Our personal banker can suggest that our various bank fees be reversed, and they can recommend that our mortgage application is approved.  However, the final decision is always made by the bank branch manager or a centralized mortgage application center.

Another key to a successful banking relationship is to know when to stop asking for favours and just be a client.  Banks make money by charging bank fees and by charging interest, they cannot always waive our fees or lower our interest rate.  As clients we have to find a balance and know when to stop asking.  As a personal banker I am less likely to go out of my way for a client who is more trouble than the business is worth.  However, I will definitely go out of my way for polite and respectful clients who rarely ask for anything.

Here are 5 Great Tips To Help Build Our Banking Relationship:

Start Young. Banks definitely consider the number of years that we have been a client when deciding to reverse our fees or approve our mortgage. Being a good client is often determined by the amount of time that we have been clients.

Be Responsible. We have to show our bank that we are responsible clients so they will want to do business with us.  We also have to show our bank that we want to do business with them too.  It is a good idea to open a bank account and set up a direct deposit along with an automatic withdrawal.  This shows our bank that we manage our money responsibly. Our banks verify the number of returned checks and insufficient fund transactions when determining if we are a responsible client.

Establish Good Habits. We should apply for a credit card at a young age, most financial institutions offer student credit cards to young clients.  We have to establish good credit habits at a young age so that our bank will approve our credit applications as we get older. When we apply for a line of credit or a mortgage later in life our bank will definitely take our past payment and spending habits into consideration.

Maintain a Relationship. Find a personal banker and establish a working relationship.  This may be an individual relationship that we establish on our own, or it may be a pre-existing relationship that our family already has with a personal banker.

Be Loyal. Not only do banks look at the length of time that we have been clients, but they also look at the number and types of products that we have with them.  It is a good idea to have all of our accounts, both credit and debit, at one financial institution.  This helps build a strong banking relationship with our financial institution.

Photo by Beneath Blue Skies

Good Morning Green Panda Readers!  We all live busy lives between working our 9 to 5 jobs, getting a higher education, trying to keep fit, and indulging in some personal fun every once and a while, we barely have time to eat and relax; let alone do our banking and pay our bills.  Mobile banking has become a more and more popular financial tool among young people and young professionals.  So today for the next post in our Fun Financial Tools For Twenty Somethings we are going to discuss the Most Popular Apps for our iPhone as well as Fun Apps for our iPhone.

Many financial institutions have hopped on the mobile banking bandwagon.  Most major financial institutions now offer their clients text banking, online banking, and iPhone apps to make banking on the go easy and accessible.  Today we are going to review the most popular apps for the iPhone as well as Fun apps for our iPhone from three major financial institutions.

Fun Apps for the iPhone

Chase bank which is a member of the J.P. Morgan Group, has some of the most creative and fun apps for the iPhone available in the financial market right now.  Chase Quick Deposit allows iPhone users to deposit our checks directly to our bank account by taking a picture of both the front and back of our check.  Clients who have downloaded and registered for the Chase Mobile App can deposit checks for free using their iPhone; we no longer have to search for a Chase bank branch or ABM.

The Chase Mobile App is available at the App Store or Android Market.  As a financial service employee my first thought when I saw this App was the potential for fraud, however the App has a Security Guarantee.

PNC offers a Virtual Wallet App for the iPhone which allows users to customize our banking experience for our personal needs.  The 90 second video explains the basics of the PNC Virtual Wallet which includes tracking our daily Spending account, saving for the short term in our Reserve account, and watching our money grow over the long term in our High Interest Growth account.

This is a fun iPhone App that made me want to buy an iPhone and open a bank account with PNC bank. The Virtual Wallet iPhone App is definitely targeting young adults who want to take the boring out of their mobile banking.  Through the Virtual Wallet we can use a budget calendar to diarize our paydays, organize our bills, and track our daily spending. We can even add items that we are saving up for to our Wish list.  This is definitely one of the most fun iPhone Apps that I have seen on the market.

Most Popular Apps for the iPhone

Chase offers a “How To” video on their Mobile Banking + Apps page which demonstrates how to download the Chase App to our iPhone as well as how to set up Chase mobile banking directly from our iPhone. Clients can check our account balances as well as perform various financial transactions from anywhere at any time through our iPhone, iPad, or iPod.

Bank of America has recently launched a new App that is designed specifically for the iPad.  This App will allow BOA users to find the nearest ABMs and Bank Branches, as well as pay bills, and check account balances.  The BOA App is available on the App Store and can be downloaded directly from the iPad.  This App is designed to optimize the iPad experience.  Smart App, Smarter Banking.

Here are the Other Posts in our Fun Financial Tools for Twenty-Somethings series:

Everything You Need to Know About Automatic Savings Plans

Learning About Lines of Credit and The Revolving Credit Door

Account Balance Are Just a Click Away with Online Banking

The Advantages and Benefits of Online Shopping

Photo by DeusXFlorida

Good Morning Green Panda Readers! Today we are going to discuss the advantages of Online Banking.  This is the second post in our Fun Financial Tools for Twenty Somethings series.  In case you missed the first post about The Advantages and Benefits of Online Shopping please Click Here.

Online Banking Offers Convenience

There are several advantages of Online Banking, and the major advantage being Convenience. No matter where we are, what we are doing, or who we are with as long as we have an internet connection we can access our online banking from our personal computer, laptop, and cell phone.  I love the fact that I can pay bills, transfer funds, and check my account balances from absolutely anywhere at absolutely any time.

Last summer while I was travelling in Spain I logged into my Online Banking to make sure that my automatic payroll was deposited into my bank account.  Even on a different continent I was able to log into my secure Online Banking to process transactions and view my updated account balances. The convenience of Online Banking allowed me to continue to pay my bills on time even though I was on vacation in another country.

Online Banking Offers Easy Record Keeping Options

Easy and Convenient Record Keeping Options are another major advantage of Online Banking.  When we log onto our secure Online Banking we are able to view all of our accounts together at the same time on our home page.

If we click on each individual account from our Online Banking homepage we can obtain detailed account information including up to date transactions and previous account statements. Having online access to our account statements is a major advantage of Online Banking because it saves us both time and money.  If we need an old account statement and request it from our financial institution the processing costs could be very high.  Very often our financial institution will charge us for the actual statement as well as an hourly rate for the research involved in retrieving that account statement. Online Banking is definitely an easier record keeping option.

Online Banking Offers Added Security

Online Banking Security is another major advantage of Online Banking.  I have added Online Banking into my daily morning routine.  Every morning after I wake up but before I take my shower I check the balance of my checking and savings accounts. Some people (especially my boyfriend) think that this is absolute obsessive-compulsive behaviour.  But I can’t help it.  I like to make sure that all of my transactions are legit and that there is no risk of possible fraud in any of my accounts.

I don’t have the world’s greatest memory and therefore I need to check my transactions every day before I forget.  Sometimes I even forget transactions that I made the day before; in the past I have reported fraudulent transactions in error due to lack of memory.  Now  to avoid this mistake I keep my sales receipts and cross reference them with my daily transactions for added security.

I receive all of my account statements through Online Banking.  This is an added security advantage of Online Banking because it eliminates the potential fraud risk of confidential information being lost in the mail.

It is important to remember that Online Banking is only as secure as our internet connection.  It is a good idea for security to have an anti virus program as well as a firewall on your laptop or personal desktop computer.  It is also not advised to log on to our Online Banking while we have other sharing and networking sites open on our computer.  If you are logged into Facebook, do not log onto your Online Banking.

We are now done with our previous series and are starting a new set of articles related to financial basics in your 20s. As a young professional you have experience plenty and absorbed lots of different information while in college and working your way up the corporate ranks. The sad reality is that many of us don’t learn enough about personal finance basics. This is where personal finance blogs come in handy.

Today we’re going to talk about personal savings accounts. We will save the discussion on business savings accounts for another day. When looking around for the best bank account you’re going to encounter various different types of banking issues. This is why I wanted to outline what you need to look for as you attempt to find yourself a savings account.

What are some basic saving account needs that should be met?

No minimum balance.

A common banking trick is to require you to have a minimum balance. Some banks will leave this at $1,000, while other banks will expect you to maintain a minimum balance of over five grand. You don’t want to get fooled by banks with one of the oldest tricks in the book. You should be able to have as much or as little money in your savings account as you want. After all it is YOUR account. The other issue is that not all of us want to store our money in one banking account. I personally have my savings spread out over a few accounts. ING is one of them and then I save money under different labels for my many financial goals.

Unlimited transactions.

I was shocked when my old bank told me that there was a limit on how many transactions I could make with my bank account. Any transaction that went over the monthly limit would come with a charge. This really frustrated me because I like to move my money around fairly frequently. Why should I get penalized for this? When considering your saving accounts needs you need to keep in mind that you’re going to want to have flexibility with your money moves. Some of us keep our money in one place, while others like to move their money around frequently. Either way you want the option to be available to you if you ever decide that you want to make some different moves.

Free checking account.

As a complementary product with my savings account, ING Direct has offered me a free savings account. This doesn’t mean that ING offers the best bank account, but it’s a great bonus to have a free checking account. The days are gone where big banks nickel-and-dime us and make money off us from every angle. A free checking account is must these days. I strongly urge that you don’t sign up with a savings account if they’re not willing to offer you a free checking account. Think of all of the money you may have spent on checking account fees in the past year alone. I was shocked one month when my bank had the nerve to charge me about $20 for transactions on my checking account. This was the day that I knew I needed to find a free checking account.

Quality service.

Since you’re trusting this company with your hard earned money, you deserve some quality service and assistance. Money issues and any problems related to fraud can be very stressful. This is where a helpful support staff comes into play. I personally feel better knowing that I can contact my bank at any time of the day to inquire about any issues. The other month my account was frozen. I was really frustrated until I found out the reason why. I used my debit card at a machine where I normally wouldn’t. Just as a safe precaution my bank froze my account because this was an usual transaction. The good part of this story is  that it showed that the bank takes client safety very seriously.

At the end of the day I just want to assure you guys that meeting your savings account needs should be fairly simple. Once you take care of your banking situation you can move on with your life and focus on what truly matters. Once you find the right savings account you can passively manage your money and maybe only check in once in a while to ensure that everything is running smoothly.

What are your saving accounts needs?

(photo credit: turbografx16)