Kick Start Your Savings Series

If summer is closing in fast around you, it may be time to kick start that savings plan so that you can enjoy all that summertime fun you had planned.  Sometimes we just need a kick start to get going.  Check out these great ideas for helping get you back on track for your goals:

Overcoming Summer Temptations

Starting the Emergency Fund

Creating Savings Goals  Start Small Think Big

Make More Money

Save on Food and Groceries

7 Ways to Save

Last Minute Vacation Savings

Back to Vacation Guide

Start small. Think big.

What is the difference between a dream and a goal? 

A dream is a vague idea with undefined steps. “I want to travel to Italy.” This is a dream with no action steps to make the dream a reality. A goal is specific plan with defined steps. “I want to run a 5k on July 4^th and I will run one mile, three days a week until the day of the race.” This goal names the ‘what’ and the ‘how’. It defines the desired result and the steps to achieve the goal. Virginia Saves encourages people to create a financial goal and make a plan to achieve it.

When enrolling at Virginia Saves, new savers make a savings commitment. The form asks for a goal, amount saved per month, number of months and total saved amount. A good savings goal has 3 parts: the amount to be saved, the period of time and the purpose of the savings.

Here are two examples:

1. I will save $30 for 12 months for Emergency savings.

            $30 x 12 months = $360

That would be a nice emergency savings. The emergency savings is money set aside for unforeseen problems that arise.

2. I will save $25 for 10 months for Christmas.

            $25 x 10 months (February through November) = $250

Christmas would look pretty Merry with $250 set aside for gift giving. A family with children in the home will enjoy the money saved in December for holiday gifts.  In January, the Ghost of Christmas Past will not visit when the credit card bill is opened.

Both of these examples will help a family’s financial situation.

Success is will be more likely if the goal is realistic.

• The amount should be 10% or less of income. Attempting to squeeze the budget too tight to save quickly can hurt long term motivation.
• Start Small. The first savings goal should be relatively small. A new saver should try a small savings goal which can be achieved quickly. A successful experience will add confidence.
• Total amount saved should cover the expense of the goal. Saving $100 for a plane ticket will not help if the ticket will cost $150.

Here is an example of a goal that needs some adjustment:

I will save $3 a month for 12 months for a reliable used car.

            $3 x 12 months = $36

That is not going to buy much of a car! If the goal is a $2000 car, then the monthly amount saved will need to be increased and the length of time to save will also need to be extended.

A great saving strategy is to ‘Pay Yourself First’. Save money out of each paycheck before paying bills. Another great strategy is to make savings automatic. Set up a direct deposit or transfer savings from a checking account in a savings account.

The amount saved is not as important as starting the habit of saving.  Increase the amount saved each month when possible. Send a portion of a tax refund to savings with the split refund.

Start an Emergency Fund! Money set aside for the unexpected is the first step to a successful financial future.

What is your savings goal? Let Virginia Saves motivate you to discover for yourself the peace of mind that accompanies having money in the bank.

Share your savings goal at virginiasaves@gmail.com!

Tax Refund Split to the rescue!

Did it happen again?  Did you say you were going to put some of your tax refund into savings last year, only to realize you spent the whole thing before you had a chance to move the money? If this describes you, then let the option to split the tax refund come to your rescue!

Savings will improve financial security. Life is unpredictable and brings about unexpected events that cause stress. The stress level of an unexpected event such as a major car repair is difficult to handle. The financial burden of the bill from the repair shop is just part of the problem. The need for new transportation arrangements until the vehicle is repaired is not only inconvenient, but can be very expensive. Money in savings helps buffer the impact on the financial situation.

Virginia Saves encourages people to become savers. The tax refund can jumpstart savings and prepare for life’s bumps in the road. Virginia Saves’ partners offer free or low cost, low balance accounts especially designed for our savers. Most people can become savers regardless of income. Start saving a portion of income received every month. Make savings automatic! Automatic transfers are great saving options at most local banking institutions. Start small. Transfer $5 to $25 to a savings account monthly. Think Big. The amount that is saved is not as important as just starting the habit of saving.

According to the IRS, the average refund for electronically filed tax returns in 2009 was approximately $2900. The IRS allows the tax refund to be split among two or three accounts. For example a $1500 tax refund can deposit $500 into a checking account to pay past bills or purchase current needs and deposit $1000 into a savings account for emergency savings. Tax preparers use Form 8888, Direct Deposit of Refund to More Than One Account, to allocate the tax refund to accounts as requested. This form tells the IRS how much money to electronically deposit in each account. It is important to check the box on the 1040 that indicates the splitting of the tax refund and double check the account and routing numbers before the form is submitted. See Frequently Asked Questions about splitting tax refunds.

Do something different this year; save part of your tax refund. You will be glad you did!

Other article about this subject:

Splitting Federal Income Tax Refunds

Where’s My Refund? 

What to do with your tax refund

Pay Past, Present and Future with Your Refund

Dreaming about the tax refund

You know you should . . . but do you?

You know you should save money, but do you put money into savings every month? Do you have a savings goal? It is easier to stay motivated when working toward a goal. The best goals are well defined.  Check out this Savvy Saver article about creating a saving goal.

Here are some steps you can take today to become a successful saver.

1. Open a Savings account. Virginia Savers can open free or low fee savings accounts at local banks and credit unions. Check out our partners. These banks and credit unions offer no fee, low beginning balance ($25 or less) accounts.

2. Make saving automatic. Set up automatic monthly transfers from checking account to savings account.

3. Start contributing to workplace retirement plans. Many employers match a portion of the fund saved in retirement funds. Try to at least save enough to receive the employer match; it is free money! There may even receive some tax savings.

4. Save the tax refund. Use the IRS’s Form 8888 to directly deposit part or all of your refund into a savings account. Visit www.Form8888.org for more information.

5. Save raise or bonus this year. Jump start savings with money that will not be missed.

6. Enroll as a Virginia Saver. Savers receive a monthly newsletter full of tips and ideas to increase savings.

The key is to start today! Start small. Think big.

Some things are not UNEXPECTED expenses

Christmas comes every December. Kids go back to school in September. The car needs new tires. These items are not unexpected. However, the family budget is often surprised by these predictable expenses.

These irregular items can really wreck efforts of money management. Planning for predictable expenses need to be incorporated in a good spending and savings plan.

Saving a portion of the tax refund can be one way to prepare for irregular expenses. The money saved will reduce financial stress. Imagine how it would feel to have money saved for Christmas, and no holiday bills arriving in January!

A Club Account at a local credit union or bank is a great way to save for upcoming events.  Christmas clubs and vacation clubs allow money to be saved for a specific period of time, called the term of the club.  The term can range from a few weeks to a year or more.  This is a great place to save money before an upcoming expense instead of using debt. Funds can be deposited manually or transferred from a checking account automatically.

Another great idea is the revolving savings account. This is money set aside every month in a savings account specifically for these expenses that do not come every month. The money in this account may be for several items.  Below is an example of a revolving savings account.

Expenses                             Total amount needed                    Monthly amount to save

Christmas                            $300                                                       $300/12 months = $25

Car repairs                          $240                                                       $240/12 months= $20

Car insurance                     $600                                                       $600/6 months = $100

Total savings deposited in account          $145 per month

This $145 deposited in the savings account every month will allow for withdraws for the whole amount of the expense (Christmas, Car repair, ect.) when the money is needed.

It is not a good idea to charge these expenses on a credit card without a plan to pay them off. Caution must be used when using debt to provide basic living expenses. A credit card is convenient, almost too convenient.  If a credit card it used to pay for items that reoccur without quick repayment, debt will build quickly. 

A better option may be the debit card which drafts money from the checking account for each purchase. Debit cards only allow money actually in the account to be spent.  This forces spending choices. ‘Will we purchase groceries for 4 days or eat out tonight?’

A debit card can have a major credit card logo and may offer the same buyer protection. It is important to ‘opt out’ of options that allow overspending the money in the account. Overdraft protection is often expensive because of the fees charged. Use the convenience of the debit card but do not purchase items that are not budgeted in the spending plan.

Planning for predictable expenses is a smart plan. Think about the expenses that are budget busters for your finances and use one of the savings option discussed to plan for the expenses.

Savings helps you expect and plan for predictable expenses!

Saftey Tips to Remember Through the Holidays

We all know the the holidays are a fun and festive time. However, it is important to keep your family happy, healthy, and safe. The best way to avoid having to use an emergency fund and save money is to prevent accidents from happening. Here are brief safety tips to keep you all safe around the home, while shopping, and traveling this season.


Home:


General Decorating:

• Be sure to inspect all tools and materials before starting with the installation process.
• If using a ladder, check the condition of rails, rungs, and brackets before positioning or climbing it. Be sure to have a spotter to steady the ladder and to pass materials and tools.
• Holiday decorations should not block exits.
• When setting up a tree, keep it away from fireplaces and space heaters. Be sure not to block any exits and keep the tree out of the way of traffic.
• Unattended cooking is the leading cause of home fires in the US. Be sure to keep an eye on the holiday cooking while attending to your guests.  

Lighting:

• Take the time to unroll/untangle and inspect each set of lights new or old for  bare/frayed wires, broken or cracked sockets and loose connections. If you find them, don't try to repair them. Throw them away or return them to the store. They are an electrical and fire hazard.
• Be careful not to overload electrical sockets
• Turn off or unplug your indoor holiday lighting whenever the decorated area of the house is unattended -- not just when going to bed or leaving the house.
• Never use electric lights on metallic trees. The tree can become charged with electricity from faulty lights, and the person touching it could be electrocuted.

Children's Safety:

• Keep young children out of areas where decorations are being installed.
• Avoid ornaments that resemble candy or food that may tempt a small child to eat them.
• Make sure to read the labels for age appropriate toys. Look for toys that have parts which cannot be removed easily
• Beware of balloons! Small children can choke or suffocate from the balloons being inhaled.
• Watch children and pets around space heaters or the fireplace. Do not leave a child or pet unattended.

Shopping:


General Shopping:

• Shop during daylight hours whenever possible. If you must shop at night, go with a friend or family member. Stay in well populated areas. If you have a cell phone make sure that it is charged and carry with you in case of emergency.
• Dress casually and comfortably and avoid wearing expensive jewelry. Not only will you feel more comfortable shopping, but you will be less of a tempting target for thieves. Leave the bulky purse at home.
• Always be aware of your surroundings.  Flustered, angry, tired, or people who are rushing don't have an eye on what's going on around them. Your packages or the next big thing on your list may be important, but pay attention! Avoid overloading yourself with packages so that you have free range of motion and visibility.

Shopping Online:  

Shop at secure sites-

Research the websites before you order

Read the websites privacy and security polices

Be aware of cookies and behavioral marketing

NEVER give out your social security number

Disclose only the bare facts when you order

Check the website address

ALWAYS print copies of your orders

Learn the merchants cancellation, complaint, and return polices

Use shopper's intuition

Be wary of identity theft

Travel:


General Travel:

• Make sure to plan ahead before you travel anywhere. A good thing to have in your car is an emergency kit. A few are pre-made and on the market, but you can easily make your own. Include: 

1.  Fire extinguisher
2.  First aid kit,
3. Jack and lug wrench
4. Jumper cables
5. Disposable flash camera
6. $10-15 dollars in small bills and change
7. Gloves
8. Pen and paper
9. Food and water
10. Rain poncho and blankets

• Matain at least half a tank of fuel when traveling. It may seem like a lot, however if you can't stop for gas it's a lifesaver.
• Develop the habit of scanning while driving and being aware of potential problems.
• If involved in a property-damage collision in an unfamiliar or potentially unsafe location, do not open or exit your vehicle. If you have a cellphone, call the police. If not, acknowledge the accident by hand signal, and motion the other driver to proceed with you to a safe location (where there are other people and light) to exchange information.

Seven Ways to Save

We all want to save money, it’s the “how” that causes some confusion. If you’re not currently saving or living paycheck-to-paycheck, you need to start by changing your behaviors. Begin by tracking your spending and making a plan to save. Saving money is simple once you realize where it’s going.

Here are seven ways that you can save $100 or more in 2010:
Reduce your cell phone plan or switch to a prepaid plan. Many of us overestimate our cell phone usage. Drop minutes or features you’re not using to add to your savings.
Walk rather than drive to destinations less than a mile. You’ll not only burn calories, but also save the wear-and-tear on your vehicle.

Shop around for auto and homeowners' insurance: Before renewing your existing policies each year, check out the rates of competing companies (see the website of your state insurance department). Their annual premiums may well be several hundred dollars lower.
Utilize a cash-only spending plan. Unlike using your credit or debit card, you can’t spend what you don’t have on you, and it makes resisting temptation easier.

Take full-advantage of discounts! Ask your HR department at work to see what discounts or group deals like are offered.

Make your own entertainment by hosting a game night with family and friends. One board game costs less than $20 and produces hours of entertainment.

Ask your local electric or gas utility for a free or low-cost home energy audit. The audit may reveal inexpensive ways to reduce home heating and cooling costs by hundreds of dollars a year.
Make sure to bank your savings! Track your progress towards a savings goal by becoming an Virginia Saver, where you can utilize the America Saves My Savings Tracker for free to record deposits and monitor your progress.

Kick Start Your Savings Series - Emergency Fund

This post is part of the Virginia Saves Kick Start Your Savings Summer. Each week we'll
 focus on saving for a particular savings goal or how to save on everyday expenditures. 
To kick start your own savings click here.For beginning and more advanced savers, nothing is more important than the emergency fund. As the cornerstone of your savings plan, an emergency fund is your protection against unexpected, but inevitable, expenses.

Step 1- Figure out your goal & a place to save. Having an emergency savings fund may be the most important difference between those who manage to stay afloat and those who are sinking financially. That's because maintaining emergency savings of $500 to $1,000 allows you to easily meet unexpected financial challenges such as a car repair or medical bill and avoid high interest, short-term loans. With your emergency fund goal in mind, decide where you want to save it. Do you need to open a savings account? Do you want to add to a savings account you already have? Determine your goal and where to keep your emergency savings.

Step 2 - Save automatically. Have a portion of your paycheck, as little as $50 a month, transferred automatically from your checking to savings account. Individuals who save automatically are more than six times more likely to be successful long-term.

Step 3 – Track your progress. By enrolling as a Virginia Saver, you can utilize the Virginia Saves Savings Tracker for free to record deposits and monitor your progress. If you’re not sure where to find the money to start saving, cutting down expenses can be easier than you think. Institute a “no-spend day” and for each dollar you don’t spend, add to your emergency fun. Stay tuned for next week for even more ways to save on everyday expenditures!