EBATES = Cash Back !

Mother’s Day is coming up soon, and I thought that I’d do an early tribute in today’s article. My mother is your typical everyday mom, retired today after serving 35 years as a language teacher in a primary school. She has no or little understanding of complicated financial tools or investments – I had to teach her about mutual funds when I was 20! However, full credit goes to her for teaching me valuable money lessons on stretching the dollar, living on a budget and sticking to it!

Dining Out Is A No No!

All those years I was growing up, especially in my teenage years when peer pressure was abound, I realised my family almost never dined out. Sure, if it was a birthday or something but other that than… the rest of the time – we were as predictable as the sun rising in the east. When my brothers and I had the nerve to complain about wanting to eat at some fancy restaurant, we would normally get a long lecture. It usually had much to do with the sky (money don’t fall from the sky), trees (money don’t grow on trees), some family called Joneses (Don’t ever try to live up to the Joneses) or about rain (always save for a rainy day). Sure we were treated to street food once in a while, but huddled on an iron stool with a bowl of hot noodle while a stray cat rubbed itself against your feet was not what we had in mind.

Now that I’m a working adult, I finally get it. Eating out can really be expensive. It adds up and becomes quite a dent on either your bank account or credit card (depending on which source you are drawing your cash from). The situation is made worse by escalating food prices today. I now appreciate eating in, sometimes even insisting on it myself, as it helps me stick to my monthly budget. I confess that the first couple of years after I started working, I ate out with a vengeance! And that explains why I had no savings and a steadily increasing debit balance on my credit card. Lesson learnt!

Bargain Hunt When You Shop

My mother made this fun – we were given a pair of scissors and were told to cut out coupons on products she had already shortlisted. I remember I was about 10 years old, and it was so exciting to be able to cut along the dotted lines as instructed. We were entrusted with those ‘gold tickets’ while mother shopped for her items and then we would hand the coupons over to the cashier at the checkout counter. My mother almost always shopped with a list.

As an adult, I did not realise that I had picked up this habit as well, until my friend pointed it out when she was shopping for groceries with me. A list helps you focus on the things you need and not be suckered into items you can live without. We had quite a bit of fun during sales too – I could push the trolley around while mom walked down the supermarket aisle picking out items the household needed. We would move from one aisle to another with purpose. You can say that she was teaching me about time management without me realising it then. I remember fondly the adrenalin rush grabbing things off the shelf when 10 other people were doing the same!

Living Frugal

This might seem like a foregone conclusion. However, I cannot stress enough that you need to embody this mantra in completeness – not just eating in and shopping during sales. My parents were happy driving around a 19-year old car, clothes were only bought when it could no longer be repaired, recycling was the main theme in my house – and I’m not talking about putting paper, plastic and glass in separate bins. To give you an example, recycling in my household meant turning old t-shirts into rags, first for inside the house then later, outside to the garage!

Also, we were also taught never ever to waste food – every morsel we put on our plate MUST end up in our stomach. Since putting money aside for a rainy day was a common mantra, we were taught from young to save a portion of our allowance – no exceptions! My mother definitely walked her talk – she did not have a flashy wardrobe or a cabinet filled with shoes.

Simplicity was, and still is the way she leads her life. I realise today that getting a head start in life is not about getting the best education money can buy or the connections to springboard your career to the top. All this will fall apart (sooner or later) if you do not have the right money blueprint as your foundation. I’m grateful my mother (and my father) was my first money mentor. The lessons I’ve learnt will be my beacon as I chart my course towards financial freedom.

Happy Mother’s Day!

Caffeinated Content

A couple of days of fine weather and I’ve called it: spring is here. The shorts are out, my tan’s coming on a treat and the barbeque is prepped and ready to grill.

But wait, spring is here: what about my ISA, I need to invest by 5 April! I can scarcely walk past a bus shelter or advertising hoarding without being reminded of all these fine and upstanding Banks and Building Societies clamouring for my money. But how do I decide which ISA to go for?

Don’t panic: ISA season still has a couple of weeks left! If you have money in an ISA and haven’t looked at what’s available recently; or perhaps you have new money to invest, these tips will help you come up trumps in the Easter Egg hunt that is ISA season:

Interest Rate

Obviously higher is better – you don’t need me to tell you that! However, you should take account of these other considerations to ensure you don’t get taken for a spring chicken:

To fix or not to fix – that is the question

Cash ISAs can pay either fixed or variable interest rates. Broadly speaking fixed rates will tend to be higher and, although you may have to commit your money for a certain length of time, you are sure of what your money will earn you. Variable rates are generally a little lower, and subject to change, and allow you access to your money sooner (although you should always check this with your provider before committing).

Bonuses

Attractive-looking ISA rates will often be partially comprised of a bonus for an initial period. There are two things to mention here: check the small print as there may be conditions you have to stick to get your bonus; and always review your rate when the bonus period ends as often the rate will reduce to a pittance afterward. Here’s an idea, set a reminder on your phone for when your bonus ends so that you can review the rate you are getting.

Consistency

Cheeky blighters these banks and building societies, catching your inner magpie with a glittery initial rate, waiting for you to forget about the account and then reducing the rate to amoebic proportions. But, who wants to have to constantly shop around all the time? Why not check out our Best Buys for the most consistent ISAs on the market?

Notice

With some ISAs, as with other types of savings accounts, you may have to give notice to withdraw your money, or forfeit some of your interest for the privilege of doing so. If you need access to your money, make sure you go for an ISA that allows instant access. If you like to dip into your savings and replace them, maybe an ISA isn’t right for you – you can only pay in £3,600 a year, or £5,100 a year if you are over 50 (the limit will be £5,100 for all from 6th April 2010) – and you can only pay this in once; check out our Savings Best Buys for a more suitable product.

Alternatively, if you don’t mind not having access to your money for a little while, why not consider a Fixed Rate ISA?

Transfers

No I’m not talking about those fake tattoos that you wore when you were a child; I’m talking about ISA transfers of course!

Some providers will let you transfer your ISA balance from previous years over to them. So, even if you have no new money to invest this year, you can still see if you can get a better rate elsewhere. It’s particularly good to look at this time of year, as this is when rates are most competitive. You don’t know your rate? Don’t give me your excuses: check your current provider’s website – it’ll be on there!

All providers are required by law to allow you to transfer out of your ISA within 30 days of your request (although watch out: they might charge you a penalty). If you are looking to transfer to another ISA, make sure that you do it properly- talk to your new provider who will help arrange this for you.

Apart from that, make sure that you compare cash ISAs as many times as you can to make sure you’re getting the best ISA deal, otherwise it’s another year to wait…

Ponds-and-Waterfalls

Good financial practice means that household budgeting should be something you already have under control. You should know exactly where your household money comes from, where it goes, and that all of your financial priorities and goals are being met. The question is however, when did you create the budget that you’re currently living within?

Although you might think that your finances are working at the best they can, if you haven’t taken a look at your household budgeting for the past year, the chances are that your budget could use a spring clean. Interest rates go up and down. Income usually changes over the course of a year whether because of salary increases, or income tax changes. Supermarket prices certainly fluctuate making your housekeeping bills higher now than they were when you set your budget in place. So unless your budget was made in the last six months, it’s probably time to dust it off and take another look at it.

Use the same format as you did for the original budget. Take a look at the figures that are current in respect of outstanding balances, interest rates, minimum payments, etc and make any necessary changes. Once you have your new total expenditure, check your income to see if this has changed. Your housekeeping money is probably higher now than it was originally so if you haven’t any additional money coming in, you may need to look at where your housekeeping money is going and consider making cuts or changes to what you buy – paying closer attention to special offers and bulk buying can help you make additional savings if you need to stretch your income a little bit further.

Spring cleaning your household budgeting isn’t just about ensuring that your finances are up-to-date however. If you are on a tight budget it’s also a great way to motivate yourself into sticking within the financial boundaries you’ve set. Seeing the outstanding balances on your debts decrease is a surefire way of re-igniting your passion for your budget!

So don’t let your budget stagnate. Make sure you schedule a time at least once a year for a financial spring clean just to make sure that your finances are working for you, and that your household budgeting plan is on track for a good financial future.

Passive Income For Life