SIMPLE STEPS TO SAVE MONEY (AND IMPROVE YOUR FINANCES, TOO!)

SIMPLE STEPS TO SAVE MONEY (AND IMPROVE YOUR FINANCES, TOO!)

Since 1955, Apprisen has been providing counseling and education to consumers on a wide variety of personal finance issues. This guide contains some helpful answers to one of our most frequently asked questions HOW CAN I SAVE MORE MONEY?

GETTING STARTED Building a savings habit is a great way to work towards financial stability and to build wealth. While it may seem overwhelming, you can get started today if you break it down into individual steps. The first question you should ask yourself is: what do you want to save for? Setting specific financial goals and timelines to reach them will help you focus your saving efforts. Then determine how much you need to save out of each paycheck to reach that goal. Review and track your spending for a few weeks. You will be surprised at what you learn! Look for ways to cut back on non-essentials in order to have money to put into your savings account. Make sure you have a rainy day fund. Developing a savings account for emergencies will help you reduce reliance on credit cards or other costly forms of borrowing. You can set up multiple savings accounts to build savings for several goals at one time. Your financial institution can assist you with this process. Save automatically. Use direct deposit from your paycheck into a bank account and the savings will grow painlessly. Direct deposit offers the additional advantages of convenience, security, and immediate access to your money.

GOAL SETTING WORKSHEET Express your goals as positive statements. Be specific and realistic. Place your most important goals at the top of your list. SHORT-TERM GOALS (1 Year or Less) i.e. Pay off credit cards TIME FRAME FOR COMPLETION 9 months 1. 2. 3. MEDIUM-TERM GOALS (1-5 Years) i.e. House down payment TIME FRAME FOR COMPLETION 4 years 1. 2. 3. LONG-TERM GOALS (5 Years or More) i.e. Build college fund TIME FRAME FOR COMPLETION 6 years 1. 2. 3.

PAYCHECK BY PAYCHECK BUDGET WORKSHEET Regularly occurring bills need to be budgeted every month and assigned to a specific paycheck. Enter the amount of your total monthly expenses into the budget column and then break your payments out by each of your pay periods. EXPENSES BUDGET CHECK 1 CHECK 2 CHECK 3 CHECK 4 Mortgage/Rent Electric Gas Water Telephone Groceries Savings Spending $ $ $ $ Credit Cards Student Loan Car Loan 1 Car Loan 2 Insurance Child Care Clothes Medical Other Set Aside Amount

BUDGET TIPS: Have a written spending plan and review it frequently. Involve the whole family in setting goals and sticking to the budget. Find a regular time to pay bills and reconcile your bank account. Make sure your budget includes your goals. Earmarking money for saving or paying down debt is the only way to get it done. HOUSING Mtg./Rent Second Mtg. Home Equity Household Insurance Taxes Electric Heat Water/Sewage Phone Cell Phone Cable Trash Security System Total MISC. EXPENSES Allowances Barber/Beauty Contributions Tobacco Gifts Entertainment Medication Pet Supplies Tuition Childcare Lottery/Gambling Newspapers Misc./Rental Pymt. Savings Other Total PROTECTION Life Insurance Medical Insurance Total NOW REVISED $ $ CLOTHING Clothing Dry Cleaning Laundry Total TRANSPORTATION Vehicle Pymt./Lease Gas & Oil Repairs Car Insurance Total FOOD Groceries Lunches Out Dinner Out Household Supplies Toiletries Total INCOME Take Home Pay (after taxes) Other Total NOW REVISED $ $ CREDIT CARDS AND OTHER DEBTS Name Balance Payment $ $ Total GRAND TOTAL EXPENSES $

SET-ASIDE FUND PLANNING FOR EXPENSES THAT OCCUR PERIODICALLY Certain major expenses occur throughout the year on an irregular basis. It may be difficult, if not impossible, to pay these bills, along with your regular bills, from a single paycheck. The most convenient way to pay for these expenses is to set small amounts of money aside regularly in a special account so that it is available when the bills arrive. Review this list and write in the amount that you anticipate you will need when these bills come due. Estimate for occurrences like car repairs, medical bills, and holiday spending. The calendar below is a good way to help you think ahead to these expenses. Write the expense under each month it is due. Total up the annual amount needed and divide by 12 to get a monthly amount you need to set aside. PERIODIC EXPENSES ANNUAL AMOUNT PERIODIC EXPENSES ANNUAL AMOUNT Car Repairs $ Snow Removal/Lawn Care $ License Plates Vacation Car Insurance Gifts Medical/Dental Holiday Spending Taxes Back to School Spending Life Insurance Other Household Maintenance January February March April May June July August September October November December

Now that you ve identified your goals and created a spending plan, here are some other ways to begin or increase your saving. PICK OUT A FEW OF THESE TIPS THAT FIT YOUR LIFESTYLE:

SAVINGS BASICS Commit to saving your change and any gifts of money (birthdays, Christmas, etc.). Save your income tax refund you can now split your refund into both savings and checking accounts. Review your paycheck. Save your overtime pay. Save your year-end bonuses. When you get a raise, save it. Continue to live on what you made before. If you eliminate an expense, save it. For example, if you quit smoking, save what you would have spent on cigarettes. Start a savings account early in the year to pay for holiday gifts. Banks and credit unions will open special accounts for that and many other savings goals. To earn the highest return on savings with little or no risk, consider a certificate of deposit. Make your savings automatic. Have your paycheck direct deposited, and then have a portion automatically transferred into a savings account. Remember, no amount is too small to get started even $25 every payday will make a difference. Invest automatically with government savings bonds. The government s TreasuryDirect program (treasurydirect.gov) provides an easy way to invest in two types of bonds: I-Bonds and EE Bonds. Understand the magic of compounding interest, also known as the time value of money. Take the number 72 and divide it by your saving rate. That will tell you how fast your money will double. The higher your savings return, the less time it will take to double.

CREDIT CARDS & LOANS Avoid late payment and over-the-credit limit fees. Fees can be up to $39. Pay more on the credit cards with the highest interest so they are paid off first. Pay more than the minimum payment to pay off balances quickly and save the money you would have paid in interest. By paying an additional $10 on a credit card with a $2,500 balance, 3.5% minimum payment and an interest rate of 15%, you can pay it off in a little over 6 years as opposed to nearly 11 years you will save yourself nearly $400 in finance charges. Try and get a lower interest rate on your credit card. How can you do that? Many times, it s as simple as just asking. There is no incentive for a credit card company to lower your rate unless you call. It s simply an example of the squeaky wheel gets the grease. Switch to credit cards with lower annual percentage rates (APR). Balance transfers can sometimes save you money, BUT read the fine print to understand all terms and conditions. INSURANCE Review your deductibles on your auto insurance for collision and comprehensive coverage. Talk to your agent about raising them to at least $500 or, if you have an older car, dropping these coverages altogether. Call several licensed insurers to find out what they would charge you for the same coverage. Review your life insurance premiums and coverage annually. If you want insurance protection only, buy a term life insurance policy. Review your insurance coverage. How long has it been since you last reviewed your insurance and do you have the appropriate amounts for your present situation? You should look at all types of insurance coverage, including health, life, car, disability, and home. Don t forget to make sure your beneficiary information is correct and up-to-date. If you pay off a credit card, continue making the payments to yourself into a savings account.

UTILITIES Make certain that appliances you purchase, especially air conditioners and furnaces are energy-efficient. Information on the energy efficiency of major appliances is found on Energy Guide Labels. A home energy audit can identify ways to save up to hundreds of dollars a year on home heating and air conditioning. Your electric or gas utility usually provides these audits. Check with your phone company to see whether a flat rate service plan will save you money. Check your phone bill to see if you have optional services that you don t really need. Low income subscribers may qualify for discount service. Call your local provider to see if you qualify. Long distance calls made at night or on weekends can cost significantly less than weekday calls. If you make more than a few long distance calls each month, consider subscribing to a calling plan. MORTGAGE LOANS Shop for a mortgage with the lowest interest rate you qualify for and with the shortest loan term you can afford. Utilize online loan calculators to compare overall costs. Be aware that the interest rate on most adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month. HOME IMPROVEMENT Shop around. Select from among several well established, licensed contractors who have submitted written, fixed-price bids for their work. Check with your local Better Business Bureau. Don t sign a contract that requires full payment before satisfactory completion of the work, and don t sign anything you don t understand or let someone pressure you into signing.

MAJOR APPLIANCES Check Consumer Reports, available online (consumerreports.org), for information about specific brands and how to evaluate them. There are often price and quality differences among brands. Once you ve selected a brand, check online to learn what stores carry this brand and to find the best price. PRESCRIPTION DRUGS Ask your physician and pharmacist for generic drugs whenever appropriate. Since pharmacies may charge different prices for the same medicine, call several locations. When taking a drug on an ongoing basis, consider using mail-order pharmacies, which often charge lower prices. Many big chains and pharmacies now offer selected drugs for $4, or even free. Make sure you check around to find the best price. FOOD PURCHASES Watch where you shop for food. Convenience stores typically charge higher prices. People spend less on food if they shop with a list, and if they go when they are not hungry. Compare price-per-ounce or other unit prices on shelf labels. Buy generic brands. If you can use them by the expiration date, buy a more economical, larger size. The higher-priced items in a store are usually located at eye level. Lower-priced items can usually be found below or above eye level. Try to avoid ready-made dishes, they command premium prices. Cutting coupons can save up to 20% on your weekly food bills. Get a Sunday newspaper and check online for coupons. Many stores accept competitor coupons, or will price match. Get a store frequent buyer card. They can give you instant access to sales and savings. Mind the scanners. Computer errors and human errors can turn into costly mistakes. Watch the clerk ring up each item and check your receipt.

GENERAL SHOPPING TIPS Plan your shopping trips. This sounds basic, but planning makes you think ahead as to whether or not you really need an item, and where you can get it at the lowest cost. Stick to your list and you will breeze through the store. Avoid impulse buys. This goes hand-in-hand with creating a list. If you see something you want to buy that wasn t planned for, give yourself a little test. Ask yourself: Will I use it soon? Will I need it later, but can save money by buying it now? Does it fit within my budget? Make sure you ask yourself if you really need the item or just want it. Be an informed shopper. Do your homework. Many companies, government agencies, and consumer groups are providing a lot of information on products. You can get unbiased information online to help evaluate if you are getting a good value for your money. Again, remember to decide if you need the item or just want it. Be a comparison shopper. With all the choices we have today, comparison-shopping is even more important. Look at ads and consider all sources such as wholesale clubs, outlets, and even thrift stores. Price is only one thing; make sure the company will stand behind its products. Keep your receipts and watch the ads. Most stores will refund the difference if the item you bought goes on sale, or if it is further marked down shortly after you bought it. Take the receipt back to the store and see if they will give you the same price. Before you buy from someone online, know whom you are dealing with. You can usually feel pretty confident dealing with nationally known brands or retailers. However, just because they are small doesn t make them bad. You can check out a business through the Better Business Bureau (bbb.org) in your area to see if they conform to their online business ethics.

BUYING CARS Consider whether a late-model used car, costing thousands of dollars less than a new vehicle, would meet your needs. The biggest cost in owning a new car is depreciation. Some new cars drop in value by as much as 20% in the first year on the road. When buying a used car, compare the seller s asking price with the bluebook or other guides to car prices found on the Internet. Have a mechanic check the car. Before leasing a car, consider the price of the car, the trade-in allowance, any down payment, monthly payments, various fees such as excess mileage and excess wear and tear. What is the cost of buying the car at the end of the lease? Read Look Before You Lease, published by the Federal Reserve Board and Federal Trade Commission, and visit ftc.gov for more information about auto leasing. CAR REPAIRS & MAINTENANCE You can save hundreds of dollars a year on gas by keeping your engine tuned and your tires inflated to their proper pressure. Use the lowest octane called for in your owner s manual. Most important find a skilled, trustworthy mechanic. Spend the time and look for a mechanic who has done work for a friend, co-worker or family member, and discuss repair options and costs. TRAVEL Air fares may be reduced by as much as two-thirds if your trip includes a Saturday evening stay-over, and by purchasing the ticket 2-3 weeks in advance. Consider low fare no-frills air carriers or alternative airports. When renting cars, shop around for the best basic rates and check the Internet. Ask about any additional charges (other drivers, gas, drop-off fees) and special offers. Also, check with your insurance agent and credit card companies in advance to avoid duplicating any coverage you may already have.

There are many websites that can help you with money management questions. Here are just a few: Saving Money americasaves.org treasurydirect.gov General Topics apprisen.com yahoo.com/finance money.msn.com bankrate.com mymoney.gov moneychoices.com tomorrowsmoney.org aarpmmp.org ftc.gov Credit Reports and Scores equifax.com transunion.com experian.com annualcreditreport.com scoreinfo.com Home Preservation and Homeownership hud.gov fanniemae.com freddiemac.com/creditsmart Additional information for making better purchasing decisions is available at local libraries, which can also provide Internet access. Remember, we are here to help. Many people just like you contact us every day to get important information and to discuss their options. If you need more information or feel a confidential, personalized counseling session at one of our local offices might be right for you, please contact us at: 800.355.2227 apprisen.com

YOUR LOCAL, PROFESSIONAL SOURCE FOR PERSONAL MONEY MANAGEMENT COUNSELING AND EDUCATION. Since 1955, we ve helped people in all stages of their financial lives master the essential skills for successful money management, wise credit use, and wealth-building. Apprisen 800.355.2227 apprisen.com