Archives for February 26, 2018

A FINANCIAL expert has revealed the money saving tips you need to know to make your kid a millionaire.

It could be as easy as simply putting £5.50 aside in a pension fund every day until your child reaches the age of ten.

Over time and due to compound interest and tax breaks, the money will grow and grow.

Rob Gardner, 39, says that if you put the sum aside every day from the day they are born until your child reaches the age of 10, this can grow into a £1million pension pot by the time they reach 65.

The £5.50 is essentially the same as contributing £6.88 a day due to tax breaks.

By the time the child reaches 10 years old, the pot will have grown by £50 a week, or £2,500 a year – making a total of £25,000.

With the help of wise investments, the pension pot could have grown to between £35,000 to £40,000 by that stage.

If simply left alone, this pot will roughly double every decade due to compound interest, growing to a million by the time your child is 65.

Mr Gardner, who is chief executive of pensions consultancy firm Redington, has described the money saving tip as the “one thing” parents should leave their children.

Many people think more money will give them freedom. However for some of us, money becomes a trap. More money is not a bad thing, but being able to enjoy it or grow it follows mental freedom first. You cannot peg your existence on it.

Ken thinks more money will sort him out and given his situation it is understandable: Ken is in a lot of debt. He has been spending beyond his means for years. Even his wife does not know exactly how much he owes.

Ken is in top management at an advertising firm and for a long time, he has lived up to the image he was expected to have. There has been pressure to drive the right car, join the right clubs, live in the right neighbourhood, associate with the right people, etc. He earns a very good salary but like most people in this situation soon find out, there is always more to buy. Ken slowly started using his credit card to finance drinks for his team on Friday evenings. Then he would take personal loans from the banks and saccos. Then he got into salary advances. When that was not enough he got a second credit card. He now needed an annual top up on his loan to pay for his car insurance. If Ken got a windfall today, nothing would change unless he loses the shackles of his social status and image that he is imprisoned by.

Let’s look at William. He runs a very successful business and he makes enough money to sustain his lovely lifestyle. Unlike Ken, he doesn’t need to borrow to keep up with the Joneses, but like Ken, his entire identity is wrapped up in how much money he has.

If you had the unfortunate incident of sitting next to him for 20 minutes you come away knowing how much he makes in a month, how much he spends on his holidays, how much school fees he pays, and so forth. He will never discuss his business plans and progress: What’s important to him is that you know how much he spends.

William could stop working and still live comfortably for a while, but he is not free. He is still imprisoned by approval. He tells people about his money to get validation. Ken and William are in two different situations but victims of the same disease.

The truth shall set you free. The truth about us is never in how much money we make or don’t make. Our identity is not money. That’s a very insecure place to be. It is good to have but it can come and go. Both Ken and William need to realise that their power lies beyond the debt they have and the money they make. They both need to change their mindsets.

Ken will only get out of debt by understanding that he doesn’t need to buy social approval. He is enough. William will be at peace with himself when he realises that he doesn’t need to validate himself at every opportunity.

It’s getting harder to do this in our society. There is a lot of noise about what people have or own and less about their values, character, experiences and the process. You can make a lot of money and still be in a cage. Many people have found true freedom when they did not have money, e.g. losing their source of income. This is because it forces you to ask and discover who you are with or without the money. Then you truly find your identity without the inauthentic layering that society demands. So as you seek to manage money, create wealth, run business and so forth, remember to hang on to the truth of who you really are. That will keep you free.

A recent survey shows that more than half of Americans have less than $1,000 in their savings account, and 39% have no savings at all.

Dedicating just one hour to change your bad financial habits can add up big savings.

Shane Eighme with Shane and Shane Financial offered advice ahead of America Saves Week, which begins Monday.

1. Get Organized
• Take one hour each day this week to get both your finances and your home in order.
• By cutting out clutter, you may find extra things around your house to sell. You might also find duplicate items like batteries or lightbulbs that you can now take off your shopping list.
• It’s also important to organize your finances by taking inventory of your accounts. A lot of people have multiple accounts or even use multiple banks.
• You should make a list with the type of account, information on how to access it, the account holder and the contact information.
• If you’re married, review this list with your spouse. I also recommend my clients who are in retirement go over that list with their adult children.

2. Create a Budget
• You know how much money is coming in every month, so you need to know how much is going out.
• Use one hour of your day to write down every expense you have for the month. Include big bills like your rent or mortgage and your utilities. It’s also important to include how much you are spending on food and entertainment.
• After you balance your finances, you can then determine how much money you are able to put into a seperate account and save each month.
• I have a budget worksheet on my website, shaneandshanefinancial.com, to help you get started.

3. Automate Your Savings
• I recommend my clients put 10-15% of their paycheck into a retirement account like a 401(k).
• After determining how much money you are able to save, set up automatic withdrawals. The best way to do this is to take the money right from your paycheck and put it into your retirement account.
• You can take it a step further by setting up automatic transfers from your checking account to a savings account or emergency fund.
• By automating your savings, you won’t forget to set money aside each month. If it’s coming directly from your paycheck, you likely won’t miss it.

4. Deal with Debt
• The average U.S. household with credit card debt owes nearly $16,000.
• It’s easy to feel overwhelmed by debt, so it’s important to get organized and make a plan to pay it off. Start by organizing your debt by account, total amount due, interest rate and monthly payment.
• Then attack the lowest balance first while making minimum payments on the rest.
• Once you get that first account paid off, move to your card with the second lowest balance. By watching your debt disappear, you’ll gain momentum to keep going.
• By taking care of your debt and the interest you pay on it, you will save yourself money and stress down the road.

Going on vacation can be a wonderful and exciting experience but it can also be costly. Depending on where you are going, one of the biggest expenses is often the flights. Naturally, this can eat into your holiday budget and leave you with less money for spending or to spend on accommodations.

These days, we can compare the cost of everything from a local storage unit to the latest gadgets simply by going online. Therefore, it makes sense to use the same method to try and bring down the cost of your flights when you are planning your trip. You will be surprised at the amount that you can actually save on flights if you shop around.

Tips to help you save:

No matter where you are travelling to, you should always take the time to compare flight prices in order to save money. You will find various ways in which you can help to cut the cost of your flights, and this can make a big difference to the overall cost of your trip. Some tips that can help you to get the best deal on flight prices include:

• Compare different airlines: The cost of flying can vary quite widely between airlines, so you need to compare different fares. Sometimes this is the result of a special sales event or in some cases it can be due to the fact that the flight takes longer due to more stopovers. However, as long as you are willing to put up with that inconvenience, you could make a big difference to the cost of your flights.

• Book a deal: You will often find that booking a hotel and flight deal makes the cost of both the travel and accommodation much cheaper compared to booking a separate flight and hotel. Therefore, you should always make sure that you compare the cost of individual booking with the cost of booking your flight and accommodation as part of the same package.

• When you travel: The cost of flights can vary based on when you travel. If you travel in peak times such as school holidays, the cost of your flights can be very high. However, if you travel off season, the cost of flying to the same destination is slashed. The days on which you travel can also affect the cost of the flight, so be as flexible as you can in terms of when you travel, as this could equate to big savings.

One more thing to remember is that some airlines charge for a wide range of extras such as seat reservations and luggage. Make sure you check to see what the extra charges are before you book, as otherwise you could end up paying a lot more for the flight.