A NO NONSENSE GUIDE TO INCREASING SAVINGS 25 WAYS TO START SAVING MORE TODAY.

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1 A NO NONSENSE GUIDE TO INCREASING SAVINGS 25 WAYS TO START SAVING MORE TODAY. 1

2 As you plan your financial future, I encourage you to speak with your insurance agent or an SBLI representative about how SBLI can help you secure the life insurance you need to protect your loved ones. Best wishes. JONATHAN POND JONATHAN POND is one of America s most trusted and knowledgeable financial experts and a pioneer in bringing low-cost, personalized money guidance to American households. His work in educating the public on financial matters has been far-reaching and widely recognized. His 16 prime-time public television specials and 21 books have been critically acclaimed for their effectiveness in providing useful and understandable financial guidance to people of all financial circumstances. The comments and opinions expressed herein are solely those of the author and do not reflect the assent of SBLI or its officers, agents, or employees. SBLI and The No Nonsense Life Insurance Company are registered trademarks of The Savings Bank Life Insurance Company of Massachusetts. NAIC # The Savings Bank Life Insurance Company of Massachusetts, Woburn, MA. All rights reserved. 2

3 Living beneath your means that is, spending less than you earn and not racking up debt is the only route to a secure and comfortable standard of living throughout your working and retirement years. Many of us aren t accustomed to cutting back on expenses, increasing our savings, and adding to our investments. We re too used to getting what we want, when we want it, to worry about actually owning what we ve got. But if you re in significant debt you don t own the home you live in, the car you drive, the furniture you sit on, or even the shirt on your back (let alone the washer and dryer you use to clean it) a minor financial problem can knock your finances for a loop. It s never too late to develop sound savings habits, and learn to invest regularly and wisely so you can share in a piece of the American dream. and worrying about how you re going to be able to meet next month s bills. You don t have to worry about losing everything if you re laid off from work, suffer a pay cut or have other unexpected loss of income. You won t feel compelled to keep up with the Joneses. (You ll be miles ahead of them when you retire.) You ll no longer have to worry if you ll be able to afford your children s tuition, your own retirement, or even your own funeral. HOW TO LIVE BENEATH YOUR MEANS Why is living beneath your means so important to achieving financial security? Because: The only way to get money to invest is to save regularly. SPEND LESS, ENJOY LIFE MORE Spending less money on the things you want in the near-term may not sound appealing. But living within your means can actually have a big impact on your happiness and peace of mind. You no longer have to worry about living from paycheck to paycheck, wondering The only way to save regularly is to spend less than you earn. The only way to spend less than you earn is to live beneath your means. If you don t get into the habit of living beneath your means, you ll never save enough money to invest, and so you ll never achieve financial security. 3

4 CUT YOUR EXPENSES, BUILD YOUR SAVINGS Saving more money means continually looking for ways, both small and large, to cut expenses. You may think you can t possibly make your budget any leaner. But in fact, there are countless ways to pare small amounts off your recurring and annual expenses. where they re spending their money. They have come up with the following moneysaving ideas: Carry lunch to work rather than go to a restaurant or deli: $18 Share a ride rather than drive to work alone: $27 Remember, saving more doesn t mean living like a miser. As your savings grow and your net worth increases, you can indulge in a luxury or two. But the ultimate goal is financial security: being able to maintain a comfortable standard of living throughout your life. Reduce lottery ticket purchases from $15 to $2 per week: $13 Reduce restaurant dining from three to two times per week: $20 Estimated weekly savings: $78 PUT YOUR SAVINGS TO WORK Earning interest on your savings through investment should be the focal point of your personal financial planning process. Despite the stories you read about Wall Street corporate czars landing in jail, small investors making it big or losing everything the investment world has much to offer the average American. Prudent investing takes the money you ve worked hard to save and puts it to work for you. Example Mark and Celeste Burns, like many other couples in their thirties, haven t been able to save very much. But they re now sufficiently concerned about their future financial security that they ve taken a hard look at If they can stick to their plan, the Burnses can begin saving fairly easily. While $78 per week in savings may not sound like a lot, it adds up over the years. The following shows how much $78 per week in savings will accumulate at a seven percent annual investment return: 1 year $4,000 3 years $13,000 5 years $23, years $56, years $170, years $400,000 4

5 Not bad, considering the small amount of sacrifice Mark and Celeste will have to endure. 25 IDEAS FOR SAVING Cutting your expenses and saving money is never as difficult you think it will be. There are innumerable ways to trim the fat from your expenses and small savings add up over time. Here are some ideas: In your home: 1. Don t set your refrigerator or freezer thermostat too low. Turn up your refrigerator and freezer thermostats a few degrees and you probably won t even know the difference. Check the owner s manual for recommended thermostat settings, but don t take that as gospel. Even if you can raise your thermostat by only a couple of degrees, you ll be saving money. 2. Turn down the temperature on your hot-water heater. You may well be able to make do with a lower temperature on your hot-water heater. See if you can live with it ten degrees lower. If so, reduce it some more. Lowering the temperature a few degrees can add up to energy-saving dollars. 3. Install a programmable thermostat. A programmable thermostat allows you to automatically change the thermostat setting when the house is empty or the family is asleep. Given the high cost of heating, the savings can be dramatic. 4. Subscribe to fewer stations or cancel your cable service altogether. Television is a necessity and a welcome form of entertainment, but do you need 350 channels? When you re shopping: 5. Save receipts for major purchases. If you ever have a problem with an expensive item you ve purchased, or it s stolen or damaged, you ll need the receipt for a refund, replacement or insurance payout. The best place to store receipts is away from your premises in your workplace, perhaps so if disaster strikes, you ll be able to show the insurance company what you owned and how much you paid for it. 6. Comparison shop for big-ticket items. Whether it s an appliance, an investment account or an insurance policy, it usually pays to shop around for the best features at the best price. The savings can be put to good use to fund a brighter financial future for you and your loved ones. 5

6 7. Rent rather than buy items that you will only use occasionally. Americans love to buy gadgets. All too often we buy something because we have a home project to accomplish, but once the project is complete, we don t use the chainsaw or leaf blower or carpet shampooer. So think very carefully before buying. These days you can rent just about anything. 11. Get hand-me-down clothes for growing children. Instead of only buying new clothes for your kids, let friends and relatives know that you d love to help them free up some closet space by taking hand-me-downs. You ll get perfectly good clothing (some of it probably never even worn) and don t have to wince when your children outgrow it in a matter of months. 8. Clip and use coupons. You ll be amazed how those nickels and dimes add up. Some coupon experts save hundreds of dollars per year on groceries. 9. Find the best buys at the grocery store by comparing the unit prices. You no longer need to be a mathematics genius to find the best buys at the grocery store. Get into the habit of checking unit prices and you ll get a lot more for your dollar. If you shop at more than one store, note the unit prices of some items that you purchase frequently and compare them between stores. 10. Be patient. Everything eventually goes on sale. Spending money feels good, and when we want something, we want it now. But if you can postpone both kinds of gratification, you can save a lot of money over the years. The item you so desperately want to buy now will most likely go on sale at a later date. In your daily life: 12. Quit feeling like you have to keep up with your friends or neighbors spending habits. One of the surest ways to bankrupt your self is to try to keep up with the Joneses. Everyone has neighbors or friends who live beyond their means and love to brag about it. But remember that you have something far more valuable: good sense, and long-term financial security which may allow you to live larger down the road. 13. Eat your breakfast at home rather than buying it on the way to work. Whenever I see people stopping on their way to work to buy breakfast, whether at a coffee shop or the company cafeteria, I figure they must be rich, because they could save a lot of money by making breakfast at home even it they carry it to work. 6

7 14. Eat at cheaper restaurants. There are probably marvelous restaurants in your community that serve good food, have good service, and charge a lot less than you re used to paying for a night on the town. 19. Stop playing the lottery. You might as well throw that money in the fireplace. At least it will provide you with some heat. In your finances: 15. Cut down on gift giving. The plain fact is that most of us spend more on gifts than we should. The price of a gift is not a measure of affection for our loved ones. Focus on thoughtful, imaginative gifts instead of pricey ones. 16. Make your airline reservations well in advance. The cheapest airfares go fast, so plan ahead and make your reservations as soon as your plans are firm. 17. Keep your cars longer. There s no reason why you can t keep a car for seven to ten years or even longer if it runs well. Sure, a late-model car feels good and may look impressive. But is it worth the cost? 18. Get a low maintenance pet. There s a lot to be said for a dog or cat that doesn t require a lot of maintenance. When choosing a breed, consider the potential costs of grooming, care and the battle against pet hair or odors in your home. 20. Keep track of how you spend your pocket money. This happens to me all the time: I start out with $100 cash on Monday. By Thursday morning I m out of money. My first reaction: someone stole my money. But the sad fact is I spent much of the money unnecessarily. Keep a record of how you spend your pocket money. It will help curb one of the biggest sources of waste in your financial life. 21. Join your employer s credit union. Your employer s credit union can be a big help toward cutting your expenses and achieving financial security. Credit unions often pay more interest on their savings accounts and certificates of deposit than the local bank and also lend money at competitive rates with less hassle than other lenders. 22. Raise the deductibles on your insurance policies. You can save hundreds of dollars per year by raising the deductibles on your automobile and homeowner s or renter s insurance policies. 7

8 23. Keep meticulous tax records. Unless you want to pay more taxes than necessary, improve your tax record-keeping system. Have a notebook handy to keep track of miscellaneous tax-deductible expenses. 24. Shop around for low-fee checking accounts. Checking account fees vary widely among banks. You may find that some offer low-fee or no-fee checking accounts to attract new customers. 25. Resist the temptation to trade up from your current home. Many of us save for years to buy a home. Yet a week after we move in we re thinking about getting a bigger house. The only certainty about trading up is that you re going to have higher housing costs. Instead, think about how you can maximize or even add to the living space in the home you have now. Increasing your savings will go a long way toward helping you achieve financial peace of mind. Making sure you have adequate life insurance coverage is another important part of assuring peace of mind for yourself and those who are dependent on you. I encourage you to speak with an SBLI representative about how SBLI can meet your life insurance needs. You can talk to an SBLI representative at or chat online at SBLI.com. Jonathan Pond NNG-Savings813 8