How to make a budget

You say you know where your money goes and you don’t need it all written down to keep up with it? I issue you this challenge. Keep track of every penny you spend for one month and I do mean every penny.

You will be shocked at what the itty-bitty expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.

That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.

If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.

The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.

See what I mean… it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.

Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.

If you want to be able to make a down payment on a house, start a college fund for your kids, start an investment stock market account, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.

Stocks or Mutual Funds?

While some may find that idea of comparing stocks to mutual funds a little bit odd, since mutual funds are often made up of stocks, bonds, or some combination of the two, it is quite necessary to compare the two when it comes to deciding what is best for your financial outlook. Some of the more notable differences will be discussed below in order to help you decide which investment type is more suitable for your financial situation.

When it comes to investing for the everyday man or woman you really can’t beat mutual funds. Stocks carry hefty fees for buying, selling, and transferring that significantly hinder any profits that would otherwise be made from the transaction. In fact, these fees often serve to deter the trading of stocks rather than encouraging it. Perversely, big trading companies offer hefty discounts for their big spenders making the stock market trading game seem even more exclusive by making it easier for those who already have a great deal invested than they make it for the new guy trying to make his way on the market. Mutual funds are much more accessible to those who don’t have massive fortunes available to invest and need to make small steps (such as $100 a month) towards their financial and investment goals.

Mutual funds typically carry less risk than the average stock purchase as well. This happens for many reasons. First of all mutual funds are not generally invested in one sector, industry, or company. For this reason if one of the stocks fails, the proceeds from the other stocks and bonds purchased will help mitigate the loss, making it less noticeable. At the same time, the loss is shared by a large group of people so that even if a slight overall loss is experienced as the result it will be much less noticeable than if the stock purchased was yours and your alone. Finally, the fact that the funds are already diversified to a large degree helps insulate from huge fluctuations in the market such as those seen recently when the sub prime mortgage industry bubble popped leaving many investors ducking for cover.

Share the wealth. Share the risk. Mutual funds offer a sense of community, commonality, and shared risk among those who buy into a specific mutual fund. This is a good thing most of the time as it enables a large group of people to share a much smaller portion of risk than if they were buying stocks of their own volition. The existence of a fund manager means that there is someone “in the know” who is looking after the profit of the fund and that has the success of the fund at heart. This is something that you won’t find when investing stocks. In fact, when it comes to the stock market the only people that really care about how your stocks are performing are those that you pay to care for these things such as your financial advisor, accountant, and/or stockbroker.

Another thing to consider about mutual funds is that they are much easier to use and/or trade than stocks. They are much less expensive to trade as well. You can purchase mutual funds from your local bank, online, and through many online trading companies as well as through many company 401 (k) plans. In other words mutual funds go out of their way to make themselves accessible. The most important thing, really, when it comes to buying mutual funds is that you devote some time to studying the history and performance of the fund you are considering to purchase as well as the fund manager for peace of mind.

As you can see there are a lot of differences between stocks and mutual funds. For small investors mutual funds are often the best route to take. They pose less risk, impose fewer fees, and place owners in a position to accrue steady, if slow, returns on their investments.

Spend Wisely to Save Money

Have you ever noticed that the things you buy every week at the grocery and hardware stores go up a few cents between shopping trips? Not by much… just by a little each week but they continue to creep up and up.

All it takes for the price to jump up by a lot is a little hiccup in the world wide market, note the price of gasoline as it relates to world affairs.

There is a way that we can keep these price increases from impacting our personal finances so much and that is by buying in quantity and finding the best possible prices for the things we use and will continue to use everyday… things that will keep just as well on the shelves in our homes as it does on the shelves at the grocery store or hardware store.

For instance, dog food and cat food costs about 10% less when bought by the case than it does when bought at the single can price and if you wait for close out prices you save a lot more than that.

Set aside some space in your home and make a list of things that you use regularly which will not spoil. Any grain or grain products will need to be stored in airtight containers that rats can’t get into so keep that in mind.

Then set out to find the best prices you can get on quantity purchases of such things as bathroom items and dry and canned food.

You will be surprised at how much money you can save by buying a twenty pound bag of rice as opposed to a one pound bag but don’t forget that it must be kept in a rat proof container.

You can buy some clothing items such as men’s socks and underwear because those styles don’t change, avoid buying children’s and women’s clothing, those styles change and sizes change too drastically.

Try to acquire and keep a two year supply of these items and you can save hundreds of dollars.

Online Stock Trading

The invention of the Internet has brought about many changes in the way that we conduct our lives and our personal business. We can pay our bills online, shop online, bank online, and even date online!

We can even buy and sell stocks online. Traders love having the ability to look at their accounts whenever they want to, and brokers like having the ability to take orders over the Internet, as opposed to the telephone.

Most brokers and brokerage houses now offer online trading to their clients. Another great thing about stock trading online is that fees and commissions are often lower. While online trading is great, there are some drawbacks.

If you are new to investing, having the ability to actually speak with a broker can be quite beneficial. If you aren’t stock market savvy, online trading may be a dangerous thing for you. If this is the case, make sure that you learn as much as you can about trading stocks before you start trading online.

You should also be aware that you don’t have a computer with Internet access attached to you. You won’t always have the ability to get online to make a trade. You need to be sure that you can call and speak with a broker if this is the case, using the online broker. This is true whether you are an advanced trader or a beginner.

It is also a good idea to go with an online brokerage company that has been around for a while. You won’t find one that has been in business for fifty years of course, but you can find a company that has been in business that long and now offers online trading.

Again, online trading is a beautiful thing – but it isn’t for everyone. Think carefully before you decide to do your trading online, and make sure that you really know what you are doing!

Stock Market Gambling

Are you addicted to gambling? How about taking risks? There are many who are literally addicted to gambling and the stock market is their drug of choice. There are many options available for their gambling pleasure and the tables, it seems, are always open with various markets around the world opening up to US money and the prevalence of Internet trading venues that are available to the average investor through nothing more sophisticated than a computer and a modem.

Day trading is a particular draw for those who are addicted to gambling through trading stocks. It provides the ups and downs very similar to the roll of the dice or the ringing of the slot machines and instant hits and misses. It can even be addictive for those who have never set foot in a casino. Of course this type of investing isn't the only investing that is very much like gambling. Any high-risk investment is going to bear some similarities, especially those that offer high payouts to those who do succeed on occasion.

The problem is that that addictive gambling can be devastating to friends, family, and finances. If you suspect that you or someone you love has a gambling problem you need to either get help yourself or encourage them to get help. There are many ways that this can be accomplished and anonymous help can be found online. Day traders have gained so much notoriety as potential gambling addicts that gamblers anonymous has begun a support group specifically for those who are addicted to gambling via day trader trading.

If you have the personality that is easily addicted to things such as lottery tickets, slot machines, chocolate candy bars, etc. this doesn't mean that you can't ever trade on the stock market it just means that it might be a good idea to avoid some of the higher risk trading and stick with more slow and steady options such as mutual funds, CDs, and the like. Your rewards are likely to be better over time and you aren't likely to experience the ups and downs that go along with activities that closely resemble gambling.

An addiction to gambling is a serious problem that can ruin a family financially. It is imperative that you get the help you need if you discover that you have a gambling problem. The first suggestion is to close up all stock market accounts that could lead to temptation. Removing temptation is always a great first step when fighting any addiction. You also need to seek support. There are many groups around the country such as gambler's anonymous that can provide you a close knit support group whenever temptation strikes. If your local chapter has a group that is designed specifically for those who are addicted to gambling through day stock trading that might prove to be the best choice to help you on the road to recovery from your addiction.

If you have been addicted to gambling in the past you should also avoid the temptation that day trading may present. Addictions may be overcome but they are never cured and temptation for many can prove to be the fatal downfall. Do not allow your gambling addiction to take control of your life once again by entering into the world of day trading after working so hard to overcome your addiction in the first place and build a life after the sometimes devastating effects that addictions can bring.

Gambling is nothing new to the world and there is nothing wrong with having the sort of personality that likes to take a gamble on occasion. In fact, there needs to be a little bit of that personality type in every day trader. It's when the gambling becomes a problem and takes over your life and your ability to make rational decisions about the money and the risks you are taking that it crosses the line between gambling and a gambling problem that borders on or is a gambling addiction. If you have crossed that line, get help today.