UK Emergency Budget 2010
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The British finance minister George Osborne has set out plans to cut billions of pounds from public spending, in a bid to restore the UK's finances. He warned there would be further cuts to come.
Less than a fortnight after the Conservative-Liberal Democrat coalition took power in Britain, Chancellor of the Exchequer (Finance Minister) George Osborne has outlined plans to cut 6.2 billion pounds (7.22 billion euros, $8.92 billion) from government spending to help reduce the budget deficit.
"In the space of just one week, we have found and agreed to cut six and a quarter billion pounds of wasteful spending across the public sector," Osborne said.
The government intends to eliminate the bulk of the UK's budget deficit, currently estimated at 156 billion pounds, over the next five years.
Where the axe falls
There will be a civil service recruitment freeze, cuts to IT programmes, property and travel budgets. Government departments will have to trim hundreds of millions of pounds from their current outgoings. The biggest cuts are due to be made at the departments for business, local government, transport and the devolved administrations which run Scotland, Wales and Northern Ireland.
David Cameron and Nick Clegg wave in front of Number Ten Downing StreetBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: The coalition has pledged to protect frontline services
The British finance minister hinted that, in his opinion, the UK could find itself looking at a debt crisis along the lines of Greece, if it did not act fast.
"Around Europe, people are waking up to the challenge of those very large deficits. If we didn't take action now, I think we would be putting the stability of the British economy in grave danger," Osborne said.
The coalition government has pledged to safeguard certain frontline services such as the National Health Service and schools. Defense and international aid spending were also spared the cuts.
More cuts to come
The coalition said this was the first round of difficult cuts on spending, and "will not be the last". Chief Secretary to the Treasury, Liberal Democrat David Laws, admitted these cuts were "the easiest efficiency savings and the most obvious areas of waste."
"As we go further into this process, the more difficult decisions will have to be made, and we're all conscious of that," Laws said.
The coalition did not say how many public sector jobs might go, but they did say the bulk would come from not filling unoccupied posts rather than redundancies. However, there is still a very real possibility of strike action by unions.
Market confidence
Canary Wharf and London finance centreBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: London's financial market is closely watching the new coalition's budget
David Jones, chief market strategist at IG markets, said the financial sector has been looking for reassurance and the cuts were "a step in the right direction". However he said there were still fears of contagion from the eurozone.
"We shouldn't think the UK is immune, because we are carrying a significant chunk of debt. The cuts are only six billion pounds, and still leaves us with a lot more to pay off over the next few years," Jones told Deutsche Welle.
The economy and the issue of cutting the budget deficit was a key issue in the election campaign, lost by former Prime Minister Gordon Brown's Labour Party. Now in opposition, Labour continue to warn that cutting public spending this soon represents a serious risk to the UK's economic recovery.
"I think it could hit the chances of a strong recovery and put us in the slow lane for growth out of the recession," said former Chief Secretary to the Treasury, Liam Byrne.
The coalition is aware it also needs to take its own share in the cuts being handed out. Public servants will now be banned from travelling first class, and government ministers will no longer have a dedicated car and driver, in order to encourage use of public transport.
Written by Olly Barret (cb)
Edited by Susan Houlton
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Tags: UK, Budget, Emergency, George, Osbourne
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Savers Miss Out On ISA Allowances
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More than half of Britons will not make use of their tax-free savings allowance this year despite having thousands of pounds sitting in instant access accounts.
Around 56% of people said they did not plan to open an Isa during the current tax year, which ends on April 5, according to high street bank Barclays.
The group said people were failing to make the most of their money, with the average consumer holding around £4,200 in instant access savings accounts and current accounts, where they earn little or no interest, and have to pay tax on what they do earn.
Among those who are not planning to open an Isa, 71% said they did not think they had the money to invest, while 13% said they did not understand what an Isa was and 11% thought their money would be tied up.
A further 46% of people said they had never saved money in an Isa before.
The research found 37% of people have already opened an Isa this year, while a further 7% plan to open one before the April 5 deadline.
People with Isas plan to pay an average of £2,500 into them this tax year, with 77% saying they were keen to make the most of their tax-free savings allowance, while 39% thought Isas paid better rates than other savings accounts.
But despite this, only a third of people plan to continue paying into an Isa during the next tax year.
Andy Gray, head of savings for Barclays, said: “It's concerning to see that so many people don’t understand Isas and will lose out on their tax-free allowance.
“Many Isas are as flexible as an instant access savings account. We would strongly recommend that people make the most of their Isa tax free allowance as the end of the tax year approaches.”
People can currently save up to £7,200 into an Isa each tax year, half of which can be held in cash. The annual limit was increased to £10,200, of which £5,100 can be held in cash, for the over -50s in October last year and will come into force for other savers from April 6.
Chancellor Alistair Darling announced in his Budget last week that the annual Isa allowance would rise in line with inflation each year going forward.
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Tags: ISA, Savers, Taxes, Free, Allowances
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0% to get 0% Credit Cards...
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The days of 0% balance transfer credit cards could be numbered as a result of new rules designed to protect consumers from unscrupulous credit card company behaviour.
New rules unveiled by the government this week will ban credit card providers from using customers’ payments to clear balances attracting the least amount of interest before more expensive debt.
This payment structure, known as negative payment hierarchy, costs consumers dearly. For example, let's say you have a £1,000 balance transfer that is interest free for 12 months plus a £500 purchase balance earning 17% APR.
Because of negative payment hierarchy, you will need to make two months’ payments of £500 before your balance transfer is paid off. In the meanwhile, your £500 purchase balance is attracting interest of 17%. Compare and buy the best credit cards
Over 79% of credit card allocate repayments to the cheapest debt first, according to Defaqto. The ban will benefit the estimated 40% of cardholders who don’t pay off their balance in full each month that are subject to more than one APR on their total balance.
Currently, only Nationwide and Saga use positive payment hierarchy – where payments clear the most expensive debts first.
David Black, banking specialist at Defaqto, says: “[The ban will] alleviate some of the lesser known tricks of the trade that have proven extremely costly to those who don't repay their entire balance every month.”
However, there are concerns that once the new rules are implemented later this year, credit card providers will attempt to recoup their losses. The UK Payments Association estimates cost of this package of changes to be around £533 million over the first two years.
Joanne Garcia, head of credit cards at Confused.com, welcomes the negative payment hierarchy ban but says the move will be “another nail in the 0% balance transfer card coffin”.
This could mean shorter 0% introductory periods, bigger balance transfer fees and higher interest rates. Some credit card providers may stop offering 0% cards altogether – and less competition means consumers will lose out.
Alternatively, Peter Harrison, credit cards expert at moneysupermarket.com, believes providers will fight back against the ban by increasing interest rates across the board. He also warns annual fees could be introduced as a way of clawing back lost revenue.
‘Hidden’ fees such as foreign exchange commissions and other charges for card use abroad will more than likely be adjusted to replace this lost revenue.
“While the short-term benefits will be felt by as many as 40% of all cardholders, the majority will see higher rates and potentially the reintroduction of annual fees as a result,” says Kieran Hines, lead financial analyst at Datamonitor.
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Tags: 0%, Credit, Government, Cards, Card, Interest
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UK Deficit Cut Plan 'too slow'
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The British government's plan to cut the public deficit in half over four years is "too slow" and should be speeded up to reduce the risk of shocks to the nation's public finances, a Fitch Ratings analyst said today.
Britain's fundamentals, however, still support its AAA rating, said Brian Coulton, Fitch's managing director for sovereigns, at a conference. Fitch has maintained a stable outlook on Britain's rating.
Coulton said Fitch would like to see a stronger fiscal adjustment aimed at stabilizing the nation's debt ratio and then placing it on a firm downward path, while cutting the deficit to 3% of gross domestic product by the 2014-15 fiscal year.
The government has forecast a deficit of nearly 13% of GDP in the current financial year.
Meanwhile, Britain's sovereign credit profile has deteriorated amid the country's high exposure to the financial sector crisis and massive de-leveraging of debt by the private sector. But Coulton emphasized strong credit fundamentals and praised Britain's "exceptional financing" flexibility.
Britain's Labour government is widely expected to call a general election for May 6. Regardless, an election must take place no later than early June.
Recent opinion polls have shown Labour narrowing the lead held by the opposition Conservative party, raising the prospect of a hung parliament in which neither party wins an outright majority. Market strategists say that's contributed to worries that a resulting government may be too weak to pursue more aggressive deficit-reduction measures.
Economists say ratings agencies, while raising warnings about Britain's fiscal outlook, appear unlikely to act on Britain's AAA rating until after the election.
At the same conference, Paul Rakwins, a senior director at Fitch, said insufficient fiscal consolidation could trigger a downgrade of Portugal's AA credit rating. Fitch placed Portugal's rating on negative outlook in September.
On Greece, Chris Pryce, a director at Fitch, said the government's successful issuance last week of a 5 billion euro 10-year government bond was an encouraging sign, but emphasized that worries over the medium- and long-term continue to linger.
While the government of Prime Minister George Papandreou has moved aggressively to slash the deficit, questions remain about the ability of the government to follow through with tough austerity measures in coming years.
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Tags: UK, Deficit, Economy, British
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Forex News
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STERLING ON A ROLLERCOASTER
Main news overnight was the FT article on the dramatic fall in Prudential's shares since the announcement of the AIG purchase. This saw cable rally to a high of 1.5077 (see earlier article sent this morning). Whilst below 1.51/1.52 the outlook for Cable remains bearish, and technically the cross looks set to reach 0.9230/40 by month end. Inflationary and fiscal concerns compounded with fears of a hung parliament in the UK general election will continue to weigh on Sterling in general.
Liberal Democrat leader Nick Clegg has attempted to soothe investor election worries by promising not to use their position (should we get a hung parliament) to force another general election, which would further delay work on reducing the UK's £178bn deficit.
However, today in Asia during early trading, the GBP moved up touching a 2-day high against its US rival on the back of some national encouraging economic reports from the region, recouping some of the damage caused by election fears earlier on this week.
Permanent staff placements in the United Kingdom rose at its fastest pace since June 2007 in February while temporary and contract hiring also increased. Staff demand among UK companies strengthened in February, extending the current period of growth to five months.
At the same time, UK consumer confidence index spiked in February coming in with a score of 80. That was sharply higher than analyst expectations for a reading of 73 following the revised score of 74 in January.
Shop prices added 1.7% on year in February after the 2.3% annual increase in January, according to the British Retail Consortium. Shop prices were up 0.6% on month.
The pound advanced to 133.69 against the Japanese yen around 9:10 pm ET from 133.04 hit late New York Tuesday. GBP/JPY pair is presently worth 133.51 with 133.8 seen as the next target level in near-term.
Against the Swiss franc, the British sterling soared to 1.6173 around 9:10 pm ET and this may be compared to yesterday's close of 1.6096. If the pound strengthens further, resistance is likely to be seen around the 1.6230 level. Currently, GBP/CHF pair is trading at 1.6161.
The UK currency that closed Tuesday's North American session at 0.9096 against the European currency edged higher to 0.9052 by 9:25 pm ET. EUR/GBP rally is presently worth 0.9060 with 0.9040 seen as the next likely target level.
The pound climbed to a 2-day high of 1.5078 against the US dollar by 9:10 pm ET, up 0.7 percent from Tuesday's New York session close of 1.4973. The cable is currently worth 1.5060 with 1.5380 seen as the next likely resistance level.
Overnight Australian GDP grew 0.9% q/q in Q4 (BarCap: 0.7% q/q cons. 0.9% q/q). The y/y growth rate was a little stronger than market forecasts but saw little reaction in the AUD or Bills market.
EURUSD traded down to a fresh nine-month low yesterday; was a quick and painful short squeeze as we traded below 1.3450 and touched 1.33 briefly before meeting reserve demand. Still see EUR in a 1.34/1.37 range with 1.3700 the topside pivot. Stops are lined up around resistance at 1.3650/80 and with more above the figure. Also worth mentioning is that the 5yr Greek CDS spreads breached 300 for the first time in the while. However, think this is likely due to regulatory risks that have forced a considerable amount of speculators (hedge funds) to exit bets.
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Tags: Forex, Foreign, Exchange, Rates, Financial Times,...
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Foreign Exchange Update
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G10 Currencies
 EUR-USD: All remains unchanged in the relation between EUR and USD. Even though USD trended slightly weaker following disappointing consumer confidence on Friday, the data did not create sustainable support for EUR-USD, so that the currency pair is once again trading around the 1.36 mark. Concerns about Greece and renewed speculation surrounding the property market in Dubai are supporting the greenback.
While a lack of data means that the currency pair is unlikely to receive any momentum from the macro side of things all eyes are on the meeting of the Euro Group today and the Economic and Finance Ministers of the EU (EcoFin) tomorrow in Brussels. Markets are once again hoping for concrete details about a possible bailout of Greece. We do not expect a clarification of how Greece is going to be rescued in an emergency. Uncertainty about this issue is therefore likely to continue putting pressure on the euro this week.
In an environment such as this, price sensitive (speculative) investors are increasingly backing USD. According to the most recent IMM Data longs in USD have risen further, while EUR shorts have reached the highest level since the introduction of the single currency. Very extreme positioning is often a sign of an impending correction as follow up purchases or sales then become increasingly difficult.
Does that mean that we will see a strong correction in EUR-USD towards 1.40? We would be very careful this time round. There is a proper reason for the negative sentiment against the EUR this time and the longer the uncertainty about the concrete shape and form of aid measures for Greece continues, the more difficult the situation for the country becomes. The CDS continue to price in a default probability of 21% and on Friday yields rose slightly rather than falling. While the EU is still relying on the Southern European country being able to bring its budget back into shape on its own, realistically the chances of that happing are small. Moreover countries that might come to the rescue are facing considerable resistance among their own population as the countries themselves are struggling with deficits and are therefore lacking the funds to support their own economy. The failure of a bailout therefore cannot be excluded completely. We do not consider the danger of this happening to be very strong, the fear of such a scenario alone should however put considerable depreciation pressure on EUR. Non-committal statements on the part of the EcoFin council would therefore be bad news for EUR.
 JPY: The Japanese GDP managed to record even stronger growth rates than expected in Q4. A growth rate of 1.1% yoy corresponds to the strongest growth since the start of 2008. Once again FX markets were completely unimpressed by the news though. And quite rightly so. Even though the danger of the country going back into recession seems to have been banished deflation is however leading to increasing concerns. The GDP deflator, the most comprehensive factor for measuring prices, fell by 3% yoy thus marking the largest fall of all times. Government and central bank have already voiced their concerns regarding deflationary tendencies and have declared that they will not accept an excessively strong yen. It therefore makes sense that investors are not using the data for larger yen purchases.
 AUD: At its rate meeting at the beginning of February the RBA had surprised markets by leaving key rates unchanged. Particularly the fact that the commercial banks had raised rates further than the key rates prevented the RAB from taking this step. Fundamentals continued to suggest that the cash rate was to rise further – the rate of unemployment fell to 5.3% in January. “If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further”, according to the RBA's last statement. In our view the RBA's minutes to be published tonight will make it quite clear that the Australian key rates will continue to rise quite quickly. More than ¾ of market participants expect a rate step in March. This share could rise in case of hawkish minutes supporting the AUD. The AUD nonetheless also remains under the influence of market sentiment. While the general uncertainty continues it will be difficult for AUD to breach the area around 0.8900-20 despite good fundamentals and the prospect of a further widening of the rate advantage.
Emerging Market Currencies
 UAH: The Ukrainian general election commission has officially declared Victor Yanukovych to be the winner of the run-off elections on 7th February. According to official counts he received 48.95% of the votes cast while 45.47% of voters were in favour of Yulia Tymoshenko. That does not mean that the political stalemate has come to an end though. First of all Tymoshenko already announced to call on the constitutional court to decide about the outcome. That is particularly annoying for the country as the independent OSCE observers had called the elections free and democratic. It therefore seems unlikely that the constitutional court is going to agree with Tymoshenko nor is it likely that we will see a repeat performance of events in 2004 when electoral fraud on the part of Yanukovych caused the so-called orange revolution. But even once Yanukovych takes office the political crisis will not yet have been overcome, as he will be unable to form a majority in parliament. That means that for the foreseeable future the IMF will not resume its payments as these are conditional to budget savings.
 CNY: The Chinese central bank will once again raise the minimum reserve requirements for the banking sector. In a surprise move it had already raised the requirement from 15.5% to 16.0%. Following the celebrations for Chinese New Year the rate will be raised by a further 50bp. Following last week's data indicating a strong rise in loans this is hardly surprising and it can be expected that further measures will follow. However, this should not lead to the conclusion that an appreciation of the CNY against the USD is on the agenda any time soon. The current strength of the USD already generates a trade weighted appreciation of the CNY. It is very unlikely that Beijing is going to accelerate this development.
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Tags: FX, Foreign, Exchange, Currencies, Rates, News, U...
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Saving accounts: shop around?
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Britons are being urged to shop around for the best savings accounts to suit their individual needs as research reveals they plan to use £3.45 billion in savings to help cover their Christmas spending this year.
According to figures from Abbey Savings, a third of people across the nation will use nine per cent of the contents of their savings accounts for the year, an average of £221 each.
Reza Attar-Zadeh, Abbey's director of savings and investments, notes that a majority of 59 per cent intend to reduce their spending during the 2009 festive season. Gifts for family and friends top most individuals' list of cutbacks.
"Whether savers decide to put their money aside for the long term, for a specific purpose such as a Christmas or a holiday, or for emergencies, the most important thing is to work out a plan of action that works for them - then choose the right accounts to suit their needs," she suggests.
Of the current savings accounts on the market, Abbey's Fixed Rate Monthly Saver pays four per cent gross/AER for a year, while the Instant Access Saver offers a rate of 2.50 per cent gross/AER.
But you cannot help but think this is just advice from Abbey for the sake of their own offer, as if they are not only telling us what to do but how we should go about doing it, just because they happen to have a solution. Saversnews aims at bringing you current news about savings and money and in this case, we will not advise anything other than for you to evaluate your own needs for the coming year.
More and more people are dipping into their saving accounts for Christmas this year so savings accounts may be contemplated upon for the following year. If you are happy with your current service, stick with it and do shop around only if you believe that there is something better out there. Perhaps the only reason why consumers are being urged to change their saving accounts is due to the large sum of money that the banks will have to give back. In short, think for yourself, don't fall into their traps.
Tags: Savings, Shop, Around, Accounts, Research, Abbey
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50 ways to save, tips 1-10
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British credit card holders now owe an average of £2,200 on their plastic and with retailers reporting a slump in sales not seen for two decades, it is clear that shoppers are reining in their spending. In short, it's payback time.
To clear a debt of £2,200 on a card that attracts an interest rate of around 15% will take more than two years assuming a monthly repayment of £100.
There are, however, plenty of simple ways to make significant savings on your regular spending that could clear the debt many times over in less than a year.
Here are 10 out of 50 tips to save money. 11 to 20 soon to come, watch this space...
1. Change your attitude to your mortgage
The most expensive item you are ever likely to buy is your home. If you're not in the privileged position to pay cash, make sure the loan you use to finance it is the best available. For example, if you are paying your lender's full standard variable rate (SVR) you are probably paying hundreds of pounds a year more than you need to.
There are thousands of deals to choose from and while it is vital to check the small print for hidden catches, this is a relatively easy way to save a lot of money. Remember: loyalty to your bank benefits your bank, not you. Even better, if you can afford to make overpayments on your mortgage, you'll clear your debt several years early and make massive savings. For example, if you borrow £100,000 at 6% over 25 years, you'll pay it back at £643 a month. The total charge for credit will be £93,000. But if you can overpay by £100 a month you'll clear the loan in less than 19 years, giving you 6 years of mortgage-free living and saving a staggering £25,000 in interest.
Saving: £1,000s
2. Clear your credit card debt
One of the golden rules of financial planning is to clear your most expensive debts first, in other words your credit cards. OK, credit cards offer a convenient way to pay for goods and services but if you can't clear the balance every month, consider a low-cost loan as an alternative. Do the sums: a credit card debt (APR 15%) of £2,200 over three years will cost £545 in interest. A loan at 6% will cost £209. A saving of £336.
Saving: £100s
3. Cut the cost of your fuel bills
As the global demand for power threatens to outstrip supply, prices are rising. But that doesn't mean you need to be ripped off. The domestic market for fuel is a competitive one and you can change supplier with a few clicks of the mouse. Your new supplier will take care of the formalities - you just pay less every month.
Saving: £100
4. Consider installing a water meter
We take our tap water for granted. And why not? The companies behind the supply exist to make a profit, we pay them to supply water and have every right to expect it to flow from our taps. But if it doesn't rain, supply runs dry and the price goes up. So you may want to consider the possibility of installing a meter. If you have a big home with few occupants you may be surprised to learn you could halve your annual bill.
Saving: £100s
5. Cut your home phone bills
BT may seem to behave like a monopoly but it most definitely is not one. If you must use your phone there are scores of cheaper alternatives from cable companies that package your telephone, television and even broadband internet access to low-cost dial-up services that give you access to cheaper calls using your existing BT line.
Saving: £100
6. Consider a pay-as-you go mobile
Ask yourself this: is your mobile phone absolutely necessary? If the answer is yes, then ask yourself whether you really need all those minutes and texts that come as part of your package. If you hand over £50 a month to your mobile phone company, that's £600 a year – or around £1,000 of your gross salary. But you can buy a pay-as-you-go phone for as little as £30 and only pay for the odd call as and when you need to.
Saving: £100s
7. Make a shopping list
Food shopping forms a significant part of our monthly outgoings and the supermarket is where the bulk of the money is spent. Tesco takes £1 in every £8 spent by UK shoppers. But be warned, stores spend a small fortune studying ways of making us part with more of our money than we would otherwise intend to. Have you ever wondered why your favourite song is playing in the background as you navigate the aisles? Have you even noticed the background music? Possibly not, but you will have noticed at the checkout that the bill is often more than expected. To circumvent this, simply make a shopping list. Dig out the cookery books, plan a few meals and only buy what you need.
Saving: £10 a week = £520 a year
8. When was the last time you went to the market?
One way to beat the supermarkets - that is, to eat healthily for less - is to use your local market stall. Lower overheads should mean lower prices. At the time of writing, cherries were on sale in Asda for £2.99 for 400g, the equivalent at the local market was going for just over £1.
Saving: £100+
9. Consider own-brand goods
You can buy a tin of Asda own-brand baked beans for 14p and a loaf bread at Asda, Tesco or Sainsbury's for 19p. Enough said.
Saving: £100
10. Don't buy designer labels
Celebrities are given expensive clothes to wear. You're not. At the end of the day, and let's face it you may only wear the outfit once, can you justify paying hundreds of pounds over the odds because a top designer has had his or her name sewn on the label? And can you honestly say you can tell the difference at a distance between a £600 designer bag and a £9.99 one from the market? Think about it.
Saving: £100s
Tags: Saving, Money, Tips
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Saving Money: What Are You Willing to Do?
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There are many reasons why people choose to save money and/or cut consumption. They may want to pay off debt, save for a specific goal like a car or a trip, create an emergency fund, pay for education, ensure a comfortable retirement, or to reduce their impact on the environment.
Just as there are many reasons to save money, there a many different ways to go about it. You can have a set amount deducted from each check and put into an account. You can give up things like eating out, cable, and trips to the movies. You can clip coupons and shop sales. You can give up vices like cigarettes and your morning Starbucks. You can do home maintenance yourself. You can make your own cleaning products. You can take a second job and earn more money. You can sell stuff you don’t need. The list goes on.
The thing is, while every savings strategy will save you money, not every strategy works well with every reason for saving. For example, the person who wants to cut consumption/spending for environmental reasons may decide that making his own laundry detergent is worth the effort because the end product is less toxic to the environment. But this same environmentalist wouldn’t see the benefit in taking another job because the commute would be detrimental to his goal of helping the environment. On the other hand, the family looking to pay down debt may decide that the time and effort required to make their own detergent could be better spent working a second job and then getting the best deal they can on store bought detergent.
Similarly, the family that has no debt and wants to save up an emergency fund quickly may have no trouble selling things they don’t need and skipping the annual vacation in order to gain large chunks of cash in a hurry, but they may not see the value in clipping coupons and giving up the daily Starbucks. But the person who wants to save for a college education far in the future may decide that they have plenty of time to save up and opt for smaller changes to the budget over time, such as giving up Starbucks every other week, or cutting meals out down from two to one per week. They may not be as willing to give up big fun in the “now” for a savings goal that's far in the future.
Generally speaking, big goals that are coming up fast (retirement's five years away, you know you’re going to need a car this year, you want to pay of $20K in debt this year, you have nothing in the emergency fund and you want $5,000 this year, etc.) require more aggressive savings strategies. You may need that second job, you may have to sell that car, you may have to sell a lot of stuff, or you may even have to downsize your house in order to raise big chunks of cash quickly. Smaller saving strategies like coupons, electricity conservation, and switching to store brands will certainly help and will get you there faster, but they won’t give you the big bucks that, say, another job will. You have to ask which is more worth your time and effort to reach your goal.
On the other hand smaller goals, or big goals that are a long way off (a vacation with a date to be determined, retirement's thirty years away, a college education for a yet to be born child, adding to an already funded emergency fund, etc.), can be accomplished with less drastic measures. Clipping coupons and putting the savings in the bank, automatic deductions from a paycheck, giving up the daily coffee, making your own lunch and eating out less can all help you save up a little at a time without requiring drastic lifestyle changes. Big changes and money raising ideas will certainly get you there faster, but you may end up resenting giving up the vacation or selling your prized guitar if another method would work.
Of course if you’re in a big financial hole, you may need to do everything large and small to get out of it. You may only be able to save your sinking ship by taking a second job, couponing, selling your stuff, and cutting out everything not essential for survival. But once you get that sorted out and you’re looking at more manageable goals, knowing why you’re saving is as important as the method you choose.
In order to understand the strategies that are most likely to help you reach your goal in the least amount of time and with the least amount of hassle, you have to know why you’re trying to save. If you don’t know and understand that, saving money becomes like throwing spaghetti at a wall. You try every strategy you run across and throw it all out there, but only a little bit sticks and you have to clean the rest up off the floor. When you fully understand where you’re trying to go, you’re better able to pick the best strategies to help you get there.
Tags: Saving, Money, Advice, Information, Topical, Sugg...
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