Simply Junior

Remember Aesop’s fable of the grasshopper and the ants? When winter came, the grasshopper went hungry because of a lack of adequate preparation. The story is used to teach children the value of hard work and saving.

Today’s world promotes spending making saving up very hard to do. Temptations abound everywhere. However, adequately preparing for the uncertain future can certainly help when the unforeseen strikes.

Saving money provides you with a benefit you may not immediately feel. However, this does not and should not detract from the importance of saving money.

The most obvious advantage of saving up is of course, extra money. But don’t get tempted yet.

Saving money will give you extra cash to use for emergencies like illnesses, accidents, natural disasters and sudden loss of a job. You won’t have to go into debt to handle such events.

If you have a healthy amount saved, you won’t have to use credit to purchase a high ticket item. You can avoid the repercussions of going into debt.

Saving up also gives you a headstart on the future. You take control of your future when you save up for college, a house, a car or even retirement. Your future won’t be so uncertain when you know that you’ll have a cushion to land on when things go wrong.

Here are a few rules for saving you should remember.

Budget

Start your savings program with a budget. Will you be using a monthly, quarterly or yearly budget? A monthly budget is easier for most people as bills come every month.

Determine your income. How much money will you make in a month after taxes? Will you have any additional sources of income other than your paycheck?

Determine your expenses. Some expenses remain fairly constant like your phone, water, cable and light bills. If you pay rent, this should be another constant expense too. You will need to determine which expenses fluctuate monthly. These can be your food, gas, clothing and entertainment expenses.

Now that you’ve determined what your expenses are, eliminate all unnecessary expenditures.

Record all your income, savings and expenses faithfully and diligently.

Create a savings plan

Set a goal. How much money will you need? How much should you save to reach that goal in a reasonable period of time? If you’re saving for the future, most experts would suggest having at least enough to cover three to six months worth of expenses.

Always keep records. You will want to know how much money you have already saved and how much you have spent.

Invest wisely and carefully. You can use your current savings to create even more savings by participating in low risk investments.

Create a savings account. There are many types of savings account available. You can choose from the most basic of accounts to a high yielding savings account to a money market account.

You can even encourage your children to save with a piggy bank. You can accompany them to the bank to open their own account once the piggy bank is full. Start the concept of saving while they’re still young and they’ll naturally imbibe the virtue.

Spend less. This is the difficult part. The trick here is not to stop spending but to moderate your spending. Cut back on eating out. Have home cooked dinners instead. Pack lunch to work. Your packed lunch will cost less and will most likely be healthier for you than takeout fare. Cancel your cable subscription if you don’t watch TV. If you can get your internet without a phone line, go ahead. If you’re mostly on the road, a landline may not even be necessary if you have a cell phone.

Pay off your debts religiously. Interest on debts can drive the cost of your debt all the way up. Once you’ve gotten your debt out of the way, you can now start on your savings plan for the future. And stay out of debt.

Over the decades the marketers have managed to pull off a very clever trick. If you go back to earlier times when people did their shopping in markets and corner shops where everyone knew everyone, the prices were always negotiable. Bargaining was part of the art of shopping. Asking for a discount or, if times were hard, a little time to pay was not shameful. All stall holders and shopkeepers knew you (and most everyone who lived in the neighborhood). There was a sense of community as people worked hard to get by (if not get ahead). But it all changed. Slowly, you were made to understand the retail price was fixed and, if you wanted credit, well, that was what banks were for. It came hard to many who had relied on the informal help offered by the retail trade. Household budgets grew into straightjackets and, if there were not enough dollars to see you through to the next paycheck, that was your problem. Loan sharks lurked outside pawnshops waiting for their prey. And then, like turning a valve to release pent-up steam in a boiler, the credit boom solved the problem for many. For those who had managed to stay solvent, credit cards and housing equity loans were there for the asking. Paying the asking price at the store was no longer a problem. The habit was set in stone. The retailers had won.

Well, hard times are here again and there should be no shame in getting the maximum reduction in the prices you pay for any goods or services. In the case of insurance, this means looking very carefully at the small print of the application process and the quotes you get. There are discounts available. All you have to do is identify what they are and how you get access to them. Not surprisingly, insurance companies are not wholly comfortable with allowing you to pay less. But, sometimes, it pays them to offer you incentives. Let’s start with the obvious. Insurers benefit if they retain careful drivers. So you should always look for a discount if you stay loyal and make no claim during a year. The longer you stay with a company, the larger the discount you should earn. If the company does not play fair and reward you, the other side of the coin is the introductory discount offered to persuade you to jump ship to another insurer. All the information about you and any claims you have made is shared between the insurance companies in the Comprehensive Loss Underwriting Exchange (CLUE). If you have a good driving record, the quotes should always encourage you to change. Indeed, many people in your situation game the system and move every year to earn another welcome discount. This so-called “churning” helps keep the loyalty discounts real.

This site has a search engine for auto insurance quotes. To trigger the search, you fill in a questionnaire. In this first article, the first discount should be offered automatically. But, if your current insurance company is only interested in a premium hike, you could try an email asking why no loyalty bonus or discount has been offered. Should this be met by silence, you can then look through the auto insurance quotes from the other companies with a clear conscience. You have given your current insurer the chance. If it prefers not to reward your loyalty, there is no reason to stay loyal.