Budget and Savings Briefs

If you’re just starting out in your career, you may think you don’t have to worry about saving for retirement. Or saving at all.

• Invest six percent of your salary into some kind of retirement plan like an IRA or a company-funded 401(K). This is especially important if your employer matches contributions.

• Set aside four percent of your paycheck to open up a brokerage account for investing, (under the right guidance).

• Save two to three percent every month to put into an emergency fund. You never know when you might need it.

Don’t equate happiness with money.
Materialistic pursuits are not a path to sustainable happiness.

Discretionary Expenses - Discretionary expenses are expenses such as entertainment, groceries, holidays, haircuts, etc that are not a fixed amount and can be reduced or trimmed down if required.

Thinking about signing a new cell phone contract? Does the rate seem reasonable? Be wary, you might end up paying more than you bargained for. Why? Because cell phone contracts’ advertised monthly bill rates are often figured without including taxes and fees, so you might end up paying a lot more than the 39.99 per month you agreed to. All told, taxes and fees can add about 20 percent to the monthly payment you will have to make. Make sure you ask specifically how much the monthly bill will be with fees, taxes and surcharges included before you sign up for anything. Most cell phone companies also have a fee for breaking a contract that can run around $200.

I will live within my means

Interest: You either earn or pay interest. If you keep your money in a savings account, you earn interest on it. If you borrow money, you pay interest on it.

While we fret over the possibility of having our personal information stolen online, the truth is we’re more likely to have our identities filched offline. Online identity theft methods constituted only 12 percent of fraud in cases where the victims knew how their identity was stolen, according to the “2008 Identity Fraud Survey Report” by Javelin Strategy & Research. The majority of cases of identity theft (79 percent) took place through traditional methods, such as stolen or lost wallets, checkbooks, credit cards, mail tampering, or “shoulder surfing”—where the thief looks over the shoulder of the victim at an ATM or cash register. Seventeen percent of the victims reported “friendly thefts”—those perpetrated by friends, family, or in-home employees.

Here are some tactics Javelin recommends for safeguarding your personal information and preventing identity theft:

• Password protect all your digital devices, including computers, PDAs, and mobile phones.

• Choose passwords and PINs that can’t be easily guessed.

• Shred all documents that have personal information on them before disposing of them.

• Use a locked mailbox for incoming and outgoing mail.

• Monitor your online accounts frequently.

• Avoid mailing checks to pay bills or deposit funds. Move your financial transactions online.

• Review your credit information no less than once per year. To receive your free annual report from one or all of the national credit agencies, visit www.annualcreditreport.com or call 877.322.8228. Other methods of accessing your reports may charge a fee.

• Never provide personal information to anyone unless you initiated the contact.

• Install and regularly update firewall, anti spyware, antivirus, and browser security software.

• When shopping online, check that you are using a reputable firm.

• Reduce access to your personal information wherever possible. Be aware of your surroundings when you conduct transactions in public.

Asset. Something you own. An asset can be property, such as your home or a company’s warehouse, a diamond ring or a piece of manufacturing machinery; securities; debts owed to you; or cash. Assets minus liabilities equals one’s net worth.

Pay yourself first. A key to becoming a saver is to pay yourself first. It’s a great way to get in the habit of saving. It may be difficult at first, but before long, you will be very happy that you are saving and paying yourself first, not last.

Personal finance expert Galia Gichon recommends plugging up some of those budget leaks you might be experiencing. As a matter of fact, she says that if you can figure out how to save just $125 per month, then set up an automatic savings to a mutual fund that yields an average of 7 percent, in five years you will have almost $9,000. In 20 years, that amount will have grown to $65,000!

Here are four suggestions from Gichon (www.downtoearthfinance.com) for coming up with that $125 per month:

1. Do you really need all those channels? Take a look at your cable bill. You can roll your bill back by getting rid of premium channels or subscribing to a smaller, cheaper package.

2. Stop picking up magazines from the supermarket or newsstand. Save yourself some money by subscribing to your favorite magazine instead. And if you’re subscribing to anything you don’t read, cancel it.

3. Consider changing your cell service to get a better deal. Shopping around can save you bucks (just make sure you won’t be penalized for breaking a contract early).

4. Call your credit card company and ask for a lower rate. Believe it or not, this usually works.