It certainly looks all doom and gloom at the moment doesn’t it?
Open any newspaper or tune into the news on TV and if you are anything like me, you get punch drunk with all the articles on how bad the stock market or property market is etc etc.
It may seem perverse then to write an article on savings!
However, as ever, this is an immensely important subject that affects our clients’ future security. As we view a Doctor or Dentist’s financial affairs over at least 15/20 years, we can clearly see the effect this has on their overall position.
Quite often the savings and investments they made in the early years were fairly modest, but have now built up very nicely thank you over time. This helps massively towards their ‘Financial Independence Day’- the time they can choose to stop working.
Because the service we offer to our clients includes being able to look ahead at how their lives will look in, say, 15 years time (by using cash flow forecasts), we can show how much they need to save/invest NOW so that they do not run out of money in the future.
So, looking at the big picture, are we Brits serious savers?
Well, we certainly used to be. It took some time to recover from the war, but by the mid 1950s, we started to make real progress.
Here is the average UK savings ratio for 1960-1989:
60’s – 5.65%
70’s – 7.95%
80’s – 8.65%
The peak came in the difficult winter of 1979, when the savings ratio hit an all-time high of 14.1%, or to put it another way, one in seven pounds.
Now let’s look at how well we saved in the Nineties:
1990 – 1994 – 10%
1995 – 1999 – 8.28%
Yes, we saved hard during the recession of the early Nineties, but our savings habit started to slip when the housing market took off from the mid 90s onwards. However, things have certainly taken a turn for the worse recently, as the final table shows:
The UK average savings ratio, 2000-2008:
2000 – 2003 – 5.35%
2004 – 2008 – 4.30%
So, a declining trend, and the situation gets even worse.
In the first quarter of this year, the savings ratio collapsed to 1.1%. This is £1 for every £90 earned after tax, and takes us to a 49 year low.
In the past, a squeeze on our disposable incomes would have made us look to cut back and save more. Sadly, after a twelve-year housing and credit boom, it appears that we’ve almost forgotten how to save.
Of course, the purpose of having a bit of a financial cushion was to help when the bad times came. Well, the bad times are here, and for some people it looks like the cushion that has been there in the past is no longer available.
Perhaps the more you earn the more leeway you will have. However it is our experience that the more you earn the more you spend! (It’s important to focus on how much income you’re left with at the end of the month, not necessarily how large the income is).
So, ask yourself – are YOU saving enough?
Key Considerations:
It does pay to save. If you are serious about optimizing your finances to secure your future, do look at what you can afford to save and invest.
Once this is decided make sure that this money is targeted at fulfilling your goals in life.
ACTION POINT
Ensure you have an up to date expenditure template to identify where your money is spent, and compare this to your income now and in the future by analyzing your cash flow forecast (CFF).
This is VITAL.
If you do not have a CFF, ask your adviser to build you one, and if they cannot do this find a planner who can.
Do you have the scope to save/save more? If you have – do it!
It will bring Financial Independence Day nearer!
By: Ray Prince
Archive for November, 2009
Frugal living is more than a lifestyle. It’s a passion.
Call Me Crazy! I love It!
Why, who wouldn’t love getting paid to buy products that they use everyday?
Here’s how I do it.
I purchase an item that has a rebate offer (either a store or manufacturer rebate) while it is on sale and use a coupon during purchase. That’s it!
Using this formula I almost always come out ahead. When all is done, I’ve gotten back more than I actually paid for the item.
Even when I do have to pay for the items like deodorant, shampoo, soap, toothpaste, and toothbrushes it’s about 50 cents for a item that would cost up to $2 -$4 originally.
Am I the only one out there that gets excited about this?
I doubt it! At least I hope not. That would make me “Crazy”, wouldn’t it? But a lot of folks just don’t know how to combine money saving measures to maximize savings.
My local drugstore (which by the way is a national chain) often advertises items free after rebate. Hey, that cuts down on a lot of work for me. Easy Money! I e an also lucky enough to have a grocery store in my area that offers rebates and offers double coupons (sometimes even doubling $1 coupons as a special promotion). Needless to say, with six mouths to feed (myself, my husband, and four kids) I’m lovin’ that idea!
As the editor of www.simpledebtfreeliving.com, I’m always looking for new ways to save money. Visit us and follow one of the e-mail links to share your ideas or just let us know how excited you get about frugal living! Let me know I’m not the only one. Then we can put my family’s worries to rest. They think I’m really crazy.
Here are a couple other ways that I save on items we use everyday:
1. Always use items that are reusable rather than throw away
For example: Reusable coffee filters, cups and plates, and my favorite pet peeve -
The great sandwich bag conspiracy
The major manufacturers of sandwich bags would lead us to believe that it takes rocket science to keep a sandwich fresh. Ask yourself this, How long do you need to keep that sandwich fresh anyway? It’s not like it’s going to the moon. It’s just going to the office or school for a few hours.
The most practical way to approach this is to purchase reusable sandwich size containers. This is also very environmentally friendly reducing a great deal of waste. If however, these have trouble finding there way back home ( which is likely if you have children), you can save substantially if you purchase the plain old pleated sandwich bag that cost a mere fraction of the razzle dazzle zipper kind. Your mother used these for years and years with great success. I have used both methods for years and have never received a complaint of a stale sandwich!
You’ll find that doing these little things like, using real cups and plates instead of paper or plastic throw away, and recycling containers for storage or even to use in craft projects, can save a lot of money. Each by itself may seem minor, but when put together amount to tremendous savings over time.
2. Don’t buy it if you won’t use it. Things like small kitchen appliances, repair tools, and gardening tools are good examples. We know they’ll make our life easier if we just had the opportunity to use them.
There are 101+ small countertop kitchen appliances available to chop it, grind it, mix it, open it, bake it, grill it..well you get the message.
Simplify your life and narrow it down to a couple you just can’t live without. For me it’s my blender and my food processor. Although, I’m seriously considering a bread maker. Not quite sure if it’s worth the money yet. Especially when I’m so close to a bread outlet. But, you can’t beat the taste of fresh baked bread. I’m not counting the coffer maker it’s kind of standard equipment these days. I wouldn?t dare ask you to give that up! What am I crazy? Well , maybe..
It’s little things like the example above that identify frugal living.
3. Always get the best value for your money. Shop around. If this is a major purchase you will want to know what to look for. Research and compare products on the internet or in sale flyers. There’s nothing more challenging to the retailer than an informed consumer. That’s what you want to be. An informed consumer knows when it’s a good value! Informed Consumer – More Savings
By: Cheryl Johnson
Saving money online is actually simpler than it may sound. With a little searching, you can find great deals online. You can also find ways to save you money at the store or most anywhere else.
A great way to save money online is to visit the Web site of your favorite retailers. Most stores list overstock items at a discounted rate. Stores also list clearance items. By shopping for deals online, you will save yourself both money and the aggravation of going to the store.
Another great way to save money online is through auction sites. Many people sell the things they no longer want or need and you can often find great steals. Unless you absolutely need a brand new lamp, you can probably find the style you are looking for online for a fraction of the cost of new.
If you are looking for ways to save money while you are out shopping in traditional stores, you can find thousands of Coupons Online. Many sites offer lists of available coupons which you can print from the convenience of home. Some sites might even offer a list of free samples for you to request.
A final way to save money online is by signing up for email offers from your favorite retailers. Ever wonder why stores ask for your email address? It’s so they can send you special offers- and some of them are really attractive!
Whether you are looking to save money on insurance or on your next new furniture purchase, be sure to search the Internet for some great deals. You just never know what you might find.
By: John K Vincent