savings

The store sign says, “End of the Year Blow-out Sale!” Tempted? Of course you are. Especially if that store is one you frequent often. So, you walk in, glance around, and immediately head to the section toting 50-70% savings.

What do you do when you spot that bargain? Do you jump on it, count your luck and dive back into your shopping? I used to, but now I stop and ask myself a couple of questions before I start congratulating myself on my "savings."

Would I buy it at regular price?

It’s hard to let go of stuff. Some things make life easier, while other items are nice mementos. Sometimes, though, stuff just gets in the way of life goals, no matter the ease or memories they provide.

Recently, for example, my husband and I sold our third car. That sounds ridiculous even as I write it, but it’s the truth. Mike and I had three cars between the two of us, and I work from home. Yes, that is right. Ridiculous, huh? That’s not the whole story, though…

The Whole Story

All of us pay taxes to make sure we have emergency services to help us in case of a fire or other problem. Emergency insurance, however, should not stop here. We also need to think about keeping our financial world safe by establishing an emergency fund, which can act like insurance for a job loss, accident, natural disaster or any other emergency.

How Much is Enough?

As Americans struggle through what we hope is the tail end of the “Great Recession”, we hear the terms “inflation” and “deflation” often.  For many people, these terms mean little beyond the definitions of “a rise in general prices” and “a fall in general prices”, respectively.  In many ways however, inflation and deflation are two of the biggest drivers for your investment decisions. How, then, does inflation and deflation really affect our families and finances?

Inflation

It’s amazing how perceptive children are: they can tell when money gets tight, and they know when you have a spare $20 in your purse. With their perception and spongy minds, children as young as four can begin to learn concepts of saving. Of course, children of different ages learn about money differently, so let’s break down savings concepts by age groups.

Have you ever bought the "cheap" version of something you needed, only to find out a day, month, or even year later that if you'd just paid the premium for the high-quality version it would have saved you money in the end? While we all know that paying attention to costs is important, saving now can easily lead to paying more in the future. Here are a couple of examples from my own experience:

Last week we took a look at compound interest and how that affects how quickly your money grows. But comparing potential banks, savings accounts, and CDs based on compound interest rates can be much easier by checking out the Annual Percentage Yield (APY).

I can count on one hand all of the times in my life when I found money:  I found $20 in front of a bakery once, $10 in the street, $20 in front of a restaurant, and $5 I forgot about in one of my spring coats.  Each time, though, I felt like the luckiest person in the world, as I’m sure anyone would feel.  So, if you had a surefire way to find hidden money and harness that lucky feeling, you would be a participant, right?  Surprisingly, simply visiting with your banker can put hidden money in the form of bank fees back into your pocket.

Bank Fees

In fourth grade, a banker came to my classroom to teach my class about compound interest. I was fascinated. First, I was shocked that a bank would pay me money to keep it safe, and second, I loved learning how I could make more money if my interest was compounded.  I memorized every single thing that would be on our compound interest test, and I did really well.  My mom even hung my A+ test on the refrigerator for a few days. 

When it comes to investing, we're all a little like Adam Sandler's character in "The Wedding Singer," who said, "I'm a big fan of money. ...I have a little. I keep it in a jar on top of my refrigerator. I'd like to put more in that jar."

If you're ready to put a bit more in that "jar," here are four things for you to think about that will help you to plan how to take the plunge into investing. (Believe it or not, it's easier than you think!)