How to Have More Money – Spend Less, Make More

Photo Credit: 401(K) 2013 via photopin cc

You might think the above statement sounds like a really easy thing to say, but a really hard thing to do. You’d be right, money doesn’t grow on trees, and living is expensive. Despite that, there are a few tweaks you can make here and there, some you won’t notice, some you will, which will mean you have more in your pocket at the end of the month, and you’re not dipping into your overdraft on week number three.

Let’s have a look at a few of those little tweaks.

Get down with budgeting

Budgeting is no fun, but if you manage to establish yourself into a routine, eventually you won’t notice that you’re doing it. At the end of the month, when you get paid, write down all your bills, aka your outgoings, and then with whatever you have spare you need to look at the other things you need to live, such as food shopping money, clothes money, travel costs, socialising. Set yourself an amount for each and STICK TO IT! If you manage this, then you will find you don’t end up penniless by the time the next payday rolls around, which will then cut down on overdraft usage fees, meaning more money in your pocket.

Continue reading

Testing the Waters: Ways to Practice Investing in the Stock Market

15489204518_eebf6fa88c_b

 

15489204518_eebf6fa88c_b

If you’re looking for ways to improve your finances with the hopes of becoming financially independent, you’ve probably heard about investing in stocks. However, if you’ve ever watched the news or checked the stock market sites, all the numbers, graphs, and terminology likely scared you away from investing. Though investing in the stock market does require a great deal of understanding and skill, it may not be as challenging as you imagine.

For those who want to figure out for sure whether the stock market is a form of investing that they want to pursue, the risks of investing hard-earned cash on a trial and error basis can seem scary. The good news, however, is that if you’re really interested in learning more about stock trading but don’t have much to invest, there are ways in which you can practice before putting your hard-earned income on the line. Below are a few options you might consider.

1.Practice Portfolios Through Financial Sites

There are major financial websites that offer interested parties the option to create a stock market portfolio free of charge. The services allow you to set up a portfolio and practice investing in stocks. You are then able to monitor your selections to see whether you’re headed in the right direction or not. This will give you the chance to see where your money would have gone had you chosen certain stocks. You can utilize this form of portfolio as long as you’d like until you’re ready to start trading for real.

2.Broker Virtual Accounts

If you’d prefer to be a bit more involved in the active process of stock market trading, there are online brokers who provide virtual trading accounts for you. Again, there is no real money involved, as the broker will allow you to set up an account with a simulated balance. As a user, you are allowed to use the trading tools provided by the broker to make trades. Virtual broker accounts give you the ability to learn more about how a broker account would work and also give you a better idea of how to develop a trading strategy that works best for you.

3.Stock Trading Games

If you’d like a bit more feedback on your trading tactics, participating in a stock market game or contest online might be more up your alley. This allows you to receive feedback and interact with interested parties on your selection of stocks and the strategies you’ve used. Not only do users get to see what you’re doing as it pertains to trading stocks, but you’re also able to see how others are trading so you can compare your choices and results. If you’ve got a few friends that are also looking to learn more about the stock market, you could create your own stock market game online and invite them to join.

4.Practice Live

Lastly, there is the option to consider practicing investing your own money into the stock exchange. Instead of investing thousands of dollars in the beginning, start with just a few hundred dollars instead. Since it is your money you’ll be investing, you do still want to keep an eye on the trends and have a basic understanding of stock trading. Keeping an eye on reports of popular stocks such as this one posted for Twitter stocks, would let you know whether it’s worth investing in or not. If, in a short period of time (let’s say three to six months), you were able to make money from the trades you’ve made, then you can consider investing more.

So before you determine whether the stock market is right for you, consider giving it a test run to see how you do. It goes without saying that sometimes things are a lot harder than they appear to be. Once you get the hang of it and have been trading for a while (through free or low cost methods), then you can make a more informed decision on whether or not this is an investment practice you want to continue.

Photo Credit: Dave Dugdale

Taking Stock of Your Spending

Photo Credit: 401(K) 2013 via photopin cc

 

Taking stock of your spending: How to cut down unnecessary bills
If you are serious about cutting costs and rationalising your expenses, it’s imperative that you know how to identify and eliminate all non-essential expenses from your budget. The truth of the matter is that we all have a variety of expenses and areas of financial outlay that are unnecessary, or far too costly.

It’s important to be smart with your spending, and this is true regardless of whether you have a smaller income or a larger income with a budget that you want to manage more effectively. When you are smart with your money, and particularly smart with your spending, you know which of your monthly bills are truly necessary and which represent non-essential spending on luxury items.

Spend money to save money?

As you analyse and appraise the way that you spend, you are likely to also realise areas where you have the opportunity to invest to save money in the long run. For example, it’s absolutely no secret that energy use around the home is costly and growing ever-more expensive.

If you want to explore an option for reducing your expenditure on energy, consider the purchase, installation and use of solar panels. An expert company, such as Australian Solar Quotes, can provide you with detailed, evidence-based information. Many people who have invested in solar panels have found that the initial investment did not take long to recoup and they now enjoy low (or no) power bills and have a home that is effectively powered by an efficient and renewable source of energy.

If you can afford the initial costs of solar panels, they are a wonderful way to live more sustainably, and spend efficiently.

Track your expenses

To accurately understand where and how your money is spent, it is essential that you track your spending. By tracking where and how you spend over a one month period, you will know whether an area of expense is fixed, variable or discretionary.

Fixed expenses

Fixed expenses remain constant, they do not change from month to month. Mortgage payments, rent expenses and other loan repayments are examples of fixed expenses.

To cut back on your fixed expenses, consider the viability of moving to a smaller, less expensive home if you are renter. Alternatively, you could consider getting a flatmate, if space is available and your lease allows it.

If you use your car a lot, particularly for travel to work, consider the cost savings that may be available through public transport use, carpooling, walking or riding a bike.

Variable expenses

Variable expenses change based on use. Good examples of variable expenses are grocery costs, as well as bills related to utilities and transportation.

Energy costs can be reduced by restricting use of the air conditioner in summer and reducing the temperature at which thermostats are set in winter.

If you still have a landline, investigate the cost savings that may be possible if you were to discontinue the landline in favour of a more cost-effective mobile plan.

Discretionary expenses

All expenses that relate to personal wants and needs fall into the category of discretionary expenses. Examples include: clothing and entertainment expenses, as well as the costs of dining out.

To reduce non-essential spending in this area, carefully examine your daily routines and associated spending. For example, buying a $4 coffee each day can total spending of $1460 per year.

Cost savings can also be made by only dining out occasionally and preparing meals at home more often. To save money, it’s also a good idea to decrease the number of personal services that you buy in. For example, attending to your own gardening and cleaning chores, as well as things like pet grooming and manicures, can bring you significant savings in the long run.

To reduce your spending on unnecessary bills, it’s vital that you take stock of your spending. You need to identify where you are unnecessarily spending money, or spending too much, and take steps to use your money more wisely.

Photo Credit: 401(K) 2013 via photopin cc

Is it Risky to Leverage When Investing in Property?

Photo Credit: archer10 (Dennis) via photopin cc

Leverage is a very risky game. Warren Buffett, the “Oracle of Omaha,” once said, “When leverage works, it magnifies your gains. Your spouse thinks you’re clever, and your neighbors get envious. But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade — and some relearned in 2008 — any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeroes, even when it is employed by very smart people.”

In its most basic form, leverage is borrowing other people’s money in an effort to increase your future gains. For example: instead of using $40,000 of the $50,000 I saved to buy a crummy fixer-upper house, renovate it with the remaining $10,000, and flip it for a total profit of $15,000, I’m going to borrow an additional $50,000, buy the same $40,000 house but then use my remaining $60,000 to renovate the house, and sell it for a whole lot more and come out with a net gain of $30,000, even after paying back my $50,000 loan.

In that scenario, borrowing money upfront enabled me to make more money in the end. Sounds great, right? It can be, no doubt about that, but as Mr. Buffett said, ultimately, history tells us we’re going to strike out. And that’s why leveraging money when investing in property is so risky.

Here’s another scenario: You borrow money, invest it in a property, and it doesn’t sell. So you invest more money. It still doesn’t sell. Now let’s see the hole you’re in because of leverage: You’ve now lost way more money than you would have if you hadn’t borrowed. You’ve lost someone elses’ money, not just yours. You’re sitting on this property that you can’t get rid of, of which all of your money is tied up in.

Obviously, the coin can flip both ways. We have a tendency to think the worst can’t happen to us. We’ve done our homework, we have the skills to make this work. All that might be true, but the bottom line is that it is risky. Make sure you understand the risks very well before deciding to leverage someone’s money into an investment property. You might come out looking like a genius, but you could also very well come out broke.

Many people may look at leverage as betting on themselves to succeed, but it’s not as simple as that. There are so many other aspects that go into success or failure. The economy could have a sudden downswing for example and no matter how good the investment seemed, or how prepared you were, there’s nothing you can do about a market crash.

leverage

For a final example, check out this chart, aptly titled, “Two Sides of the Same Coin,” put together by Christopher Joye of the Financial Review.

The bottom line is you just never know what’s going to happen. Yes, it is risky to leverage money when investing in property, but that doesn’t mean you shouldn’t do it. It just means be prepared.

Photo Credit: archer10 (Dennis) via photopin cc