The stock market is no longer the sole playground of the rich and famous, with an increasing number of part-time investors opting to dabble in trading. However, rather than sticking to conventional stocks and shares, the world of foreign currency trading is becoming an attractive proposition for many.

Foreign currency trading, or forex as it is more commonly known, involves betting on the movements of two different currencies against each other. A trader must pick which currency will rise and which will fall. If the market moves in the right direction, a profit can be earned. Predicting that one currency will rise is known as `going long` while the one that is predicted to fall is known as `going short`.

It is not possible to trade on the market directly, so every investor needs to find a broker to execute the deal. One of the major advantages of forex is that, unlike stocks and shares, brokers do not charge fees or commission. This may sound strange but they earn their money in a completely different way.

As mentioned above, each trade involves one currency going up and the other going down. The investor is in essence, buying the currency that they think will increase and then selling it when they close the deal. The reverse is true for the currency predicted to fall; the investor is selling it when the trade is opened, but `buying` it when the trade is closed. Each broker has two different prices, with one for buying and one for selling. The price an investor buys a currency for is known as the ask price and the amount they sell it for is known as the bid price.

There will be a bid and an ask price for each currency and the difference between the two prices is known as the spread. If you have chosen to go long, the ask price will be higher than the bid price and the reverse if you have opted to go short. This means that in order to make a profit, the market must move sufficiently for the bid price to move past the offer price and until it does that, you will not have made any money. The spread is how brokers make their money and finding one with a tight spread is one way to help maximize your chances of making a gain.

It is possible to trade with a wide range of currencies; most brokers offer up to 80 different pairings. However, the most popular ones to choose are the US dollar, the euro, sterling, the yen, Canadian dollar, Australian dollar and Swiss franc. These are known as the majors and are the most commonly traded currencies. Other currencies are known as the minors and there are those on the fringes, such as the Brazilian real, which are usually called `exotics`.

The forex market is truly a 24-hour one and only shuts for a few hours at the weekend. Because of the international nature of its trade, there is a huge amount of liquidity and there is no chance of the market being deliberately manipulated by rogue investors.

Forex offers huge potential for gains, but due to its volatility and rapid movements, it is possible to lose large amounts of money very quickly. For this reason, it is recommended to limit each trade to no more than 5% of your account balance and to use a stop-loss order. This is an automatic block that closes the deal as soon as the market reaches a certain level and can be a lifesaver when a currency takes an unexpected plunge.

Forex is a huge subject and it is recommended that anyone considering dipping a toe in should first thoroughly research the subject and practice before entering a live market. However, with patience and a willingness to learn, it can offer substantial returns, even when the economic outlook is not so rosy.

Many people are interested in investing to secure their future. It is usually understood that it is not a good idea to rely entirely on the government to provide sufficient funds for retirement. There are many financial products to choose from that allow individuals to take care of their own financial future. Many things can be classified as financial products, such as insurance, bonds, stocks and financial loans. In fact, anything that is sold by banks, insurance companies, or brokerages can be considered a financial product.

Mortgages also fall under this category. There are some financial products, such as extended warranties for new cars, that many feel are totally unnecessary. Obviously, choosing a financial product depends on what you need it for. If you want to buy a house, you need a different financial product than if you are taking out a loan for a car.

In general, the best thing to do is to shop around and find the best deal possible. Mortgage rates vary according to the type of terms that are agreed upon. Choosing a mortgage with the lowest interest rates makes sense and it is prudent to keep up with what is happening in the markets in this regard. The informed consumer is a wise consumer. Sometimes, it may be better to take out a variable rate mortgage, while at other times, it is best to stick with a fixed rate mortgage. It is best to talk with several mortgage representatives to find out what is best for your present and future situation.

Nowadays, there are so many options and the financial field has really opened up. Rates are more competitive than ever for those who pay attention and shop around. The internet has made a big difference in this field because there are now many financial companies that offer their services online and make it easier than ever to compare rates.

Financial products, such as stocks and bonds, should be considered only when there is a sound knowledge of market conditions and fluctuations. This is why investing in stocks, while it can certainly be done on your own through one of the many online investing companies, should only be undertaken when all the benefits and risks have been weighed. This is an area where it would be wise to consult with a professional investment adviser. Doing this can make a big difference in the success and growth potential of the investment portfolio. Similarly, anyone interested in obtaining life insurance would be best advised to speak with a professional. Many things, including health, age and whether you smoke, are taken into consideration when insurance companies decide what plan you qualify for.

It does involve a bit of research to find the perfect financial product for your situation. Even with advice, it is always up to the consumer to make the correct choice and choose the financial product that provides the most benefit. If you are interested in obtaining a mortgage, it may be a good choice to check rates with a mortgage calculator first.

Financial products are simply instruments offered by the financial services industry that help you save or invest your money. There is such a wide variety of financial products to choose from that it can be difficult to know which ones you should purchase. Here are a few tips on selecting certain financial products to suit your individual needs.

Credit Cards

When shopping around for a credit card, first consider how you`ll be using it. Only use credit cards that match your lifestyle. For example, if you won`t be able to pay your full balance every month, then choose a credit card with low interest rates.

Frequent travelers should consider a credit card affiliated with hotel rewards or airline frequent flyer rewards. If you`ll mainly be using the card to purchase groceries or gas, then look for a credit card that gives cash back or bonus awards for those everyday purchases.

Savings Products

Several financial products exist that are specifically designed to help you earn money as you save money. Savings accounts, money market funds and certificates of deposit, or CDs, are all low-risk ways for you to earn a little extra money back. These products typically offer very low interest rates, however.

If you can leave your money alone for a while, consider investing in a fixed annuity or an equity-indexed annuity instead. These financial products are long-term savings plans that can earn you some extra income if the stocks do well. They also offer a guaranteed crediting rating just in case the stock prices fall or remain the same.

Investment Products

The financial industry offers consumers a variety of investment products. Keep in mind that investment financial products can earn you more than savings products but they also come with a greater potential risk of financial loss.

If you are a low-risk kind of person, look into treasury bonds. The U.S. Treasury Department guarantees that you`ll receive your investment money back along with interest payments, but you have to hold the bonds until their maturity dates. Cashing in these bonds early will cost you.

Stocks have the potential of earning you a much higher return on your investment but there is also a greater risk that you`ll lose your initial funds. When you make an investment in mutual funds, your money is placed with that of other investors. A professional money manager carefully selects where to invest the group`s money. This might be an ideal financial product for you if you have limited funds, knowledge or time. Keep in mind that even with a professional money manager, you still run the risk of financial loss if the stock market takes a dive.

Before selecting any kind of financial product, you should first determine your financial goals. Will you need to be able to access any funds you invest within the next several years? Will you be able to leave investment funds alone for a longer time, such as over ten years? Research all types of financial products carefully before making a purchase. Fortunately, Moneysupermarket has online tools to help you compare different financial products and determine which products are right for you.

Now that the Year of Our Lord 2012 is well underway, you may have some hokey new year’s resolutions lined up. From losing weight, to saving some money, to calling your mom more frequently, it’s good that you have some goals you’d like to accomplish. In the grand scheme of things, however, why not draft a goal that will truly change your life?

If you are like the majority of Americans, you have significant amounts of debt. If you are like I was two years ago, you have a boatload of debt that’s threatening to sink the ship of your personal American Dream. Now, what you’re probably doing now to address this debt is to pay monthly minimums on what you owe, with the mindset that you’ll be in debt for the rest of your life, so what’s the rush? Well I’m here to tell you that it is possible to get rid of most of your debt before your next birthday. You just have to want it badly enough. Especially if you’re single with a steady income, consider doing some extreme saving. Consider starting a spending fast. Here’s how it works:

Slash your rent by living with roommates.

For most of us, the most significant monthly expenditure aside from paying off debts is rent. Depending on where you live and what lifestyle you desire, you may use as much as half or more of your paycheck just on paying for a place to live. When I started my spending fast, I didn’t want to live in a complete dump. Instead, I found two roommates to share a three bedroom apartment. My rent dropped by $600 dollars per month.

Cook at home at least five days out of seven.

I know, I know. For many of us, cooking is time-consuming, boring, and we’re just plain bad at it. As someone who literally never cooked until starting my spending fast, I spent about a month consuming less-than-satisfying fare. But you know what? I found out soon that there’s really no such thing as a cooking green thumb. You learn to cook by actually cooking. Now, I can cook better than my mother, and I saved a killing. Consider this—your average, healthy meal at home costs about $2 to $5 to prepare, whereas a typical meal out costs $10 or more. I ended up saving about $500 a week on food and drinks, no joke.

Leave the car at home and take public transportation.

Paying for gas and parking may now be so much a part of your life that you don’t even realize how much money you’re spending. I started taking the bus to work, and used my car only when absolutely necessary (i.e. when I needed a trunk to carry cargo like groceries). My employer covered my bus tickets, and I saved $200 a month. I also lost weight instantly by walking substantially more than I did before ditching my ride.

Have a night out once a week at most; entertain yourself at home the rest of the time.

For all you social butterflies out there, this may be the most difficult expense to cut. But think about it—how much cheaper is a night in with close friends? Do you ever have those evenings out that go a little too far, those nights in which you say far too often, “this round is on me”? Giving up the bars, clubs, movie theaters, etc., will save you more money than you can imagine. Personally, I saved an additional $300 a month.

Pay off your debts with any money saved from the above.

Now when you go on a spending fast, you realize at the end of each month how much more of your paycheck is leftover. With all the cuts you’ve been applying to your budget, you may be tempted to go on shopping spree. But remember why you are fasting in the first place. Put aside extra money and pay off those loans and credit cards!
One thing that you must remember before beginning a fast is that it is not going to be easy. It will require many sacrifices, sacrifices that you will not be used to making. At the same time, there’s nothing better than that feeling of knowing you are debt free. It took me about year of extreme saving to pay off $20,000 in debt. You can do it, too, as long as your remember that it’s people, not money, that’s the most important thing in life. Good luck!

This is a guest post by Eliza Morgan who is a full time blogger. She specializes in writing about business credit cards. You can reach her at: elizamorgan856 at gmail dot com.

Guaranteed Investment Contracts

GICs for short, guaranteed investment contracts are fixed-income contracts issued by insurance companies as an investment option for 401(k) retirement plans. Another, more common, name for GICs is “stable value funds.” Like Certificates of Deposit, only tax-deferred, GICs pay a fixed-interest rate for a specified period of time (e.g. 3 to 5 years). Because they are backed by an insurance company, and not the federal government, GICs generally pay a higher return than CDs and other cash investments. Their return is lower than stocks, however, leading to criticism that they are inappropriate for long-term financial goals like retirement. These are popular for retirement savings among the most conservative investors.

Money Market Mutual Funds

Money market mutual funds are a type of mutual fund consisting of high quality, short-term debt instruments such as Treasury bills and short term corporate IOUs. Like all mutual funds, money market mutual fund (MMMF) portfolios are professionally managed and a management fee is charged against fund assets to cover this expense. MMMFs offer market-based rates and are quick to respond to changing conditions because the average maturity of securities in their portfolio is 90 days or less. The minimum initial deposit is set by individual investment firms and can range from $250 to $25,000. MMMFs can be purchased directly from investment companies or with the assistance of financial advisors. The factor that makes these popular for retirement savings compared to CDs is that money market funds are totally liquid, just like a checking account.

Unlike bank-sponsored money market deposit accounts (MMDAs), there is no FDIC insurance if a MMMF fails to maintain a $1 share price. Failures have happened very infrequently in the last 20 years, however, and most investment firms have shored up MMMF prices with other company assets to avoid a loss of principal by investors. Limited check writing is generally available on MMMFs with a minimum amount (e.g., $250) per check. Investors seeking both safety of principal and tax advantages can select tax-exempt MMMFs that include short-term securities issued by state and local governments. Other conservative choices are MMMFs that invest solely in Treasury bills and/or Treasuries plus debt of federal government agencies.

Bank CD — Certificates of Deposit (CDs)

Also known as “time deposits,” certificates of deposit (CDs) are an insured bank product that pays a fixed rate of interest for a specified period of time (e.g., 18 months). These are favorites for retirement savings among seniors because of their safety. Typical CD maturities range from seven days to five years, with higher rates of return paid on CDs with longer maturities. A penalty is assessed if funds are withdrawn prior to maturity, resulting in the loss of a certain number of days of interest (the amount varies among financial institutions). If an early withdrawal penalty exceeds the interest earned, the difference will be deducted from an investor’s principal.

Many people think that CDs can only be purchased at banks. However, many credit unions and full-service brokerage firms also sell federally insured CDs, thereby catering to seniors’ retirement savings needs. Investment firms purchase the CDs of banks nationwide in large blocks and sell them to investors in small denominations. The difference between their buying and selling price, called “the spread,” is how they make a profit. Since brokers shop the entire country for high yields, brokered CDs often pay more attractive rates than CDs at local banks. CDs can be redeemed prior to maturity, often without penalty, but, due to interest rate risk, the value of a brokered CD can be higher or lower than someone’s initial investment.

Another options for retirement savings, a relatively new type of CD, is the equity-indexed CD. Sold through both banks and brokers, these CDs base returns, in part, on appreciation of a stock market index like the Standard & Poor’s 500 (S&P 500). Many require a $5,000 initial investment ($2,000 for IRAs). Unfortunately, equity-indexed CDs rarely include the full appreciation potential of the S&P 500 because they exclude the portion derived from company dividends. Many also cap the maximum growth rate, which further reduces upside potential. As a result, most financial advisors suggest avoiding these CDs and buying regular CDs for income and a stock index fund for capital growth.

It’s rare to go through life without saying “I need money”. If that’s where you are right now, read on for some ideas about how to get the money you need!

Because the Internet is full of sketchy ideas and shady propositions, the NeedMoney.com crew have compiled some of the best legitimate solutions to the ageless “I need money” dilemma. These should go a long way to getting you headed in the right direction.

1: I Need Money to go to School
This is an easy one. Governments are eager to help you further your education. If they can’t or won’t help, banks will usually consider education loans to be good risk. Check with your school’s Financial Aid department for resources.

2: I Need Money to Buy a Car
Unsurprisingly, what you need here is an auto loan. That’ll mean being careful about how you manage your budget—people can get themselves into awkward situations easily with auto loans. It does mean you will owe more than your auto is worth, possibly a lot more, and it’s hard to get yourself out of a situation once you’ve fallen behind with the payments.

3: I Need Money to Buy a House
Start reading up about mortgages. Go slowly, read forums, talk to experts. You’ll soon find out how to get the best mortgage for you, or what you need to do first to make it happen.

4: I Need Money to Fund my Business
A good entrepreneur can accomplish anything, given the right funding. If banks won’t lend directly to the business, you’ll have to get creative—perhaps try personally guaranteeing the loan. Better yet, build your business credit so your venture can borrow on its own.

5: I Need Money to Pay Other Debts
You’ll want to investigate debt consolidation programs. Of course, these only shift debt, not eliminate it. Nevertheless they can help by reducing overall interest.

6: I Need Money for Home Improvement
A lot of homeowners use home equity loans to fund home improvement projects. It’s a good way to get the large amount of money you require at a decent rate. To buy or refinance and make improvements at the same time, consider a government backed loan.

7: I Need Money to Avoid Foreclosure
Before you borrow more, know the alternatives. You may be able to participate in a debt workout program with your lender. Lenders will prefer to work with you and avoid the foreclosure process as well.

8: None of these, but I still Need Money!
Whatever it is you want to buy, there’s a good chance you can borrow for it somehow. If you’re really desperate, and the money’s only required for a short period, you might want to try a payday loan–these guys will let you apply for one online immediately, with no faxing or paper documents required.  Person to person lending, also known as P2P or peer to peer lending, may also be a solution for you.

Hope some of these options can help get you thinking in the right direction. How about your experiences? Let us know!

Shopping online has become a popular alternative for people looking to skip the lines and chaos that shopping in stores can bring, but for incautious consumers shopping online can lead to a whole new set of problems as many cybercriminals look to scam unsuspecting holiday shoppers.

“Online shopping has become so popular that it now accounts for nearly half of all holiday shopping,” said Abbe Forman, assistant professor of computer and information science at Temple University. “While online shopping is easy, convenient, and fun, security concerns still keep many folks away. Even savvy online shoppers should take a few extra moments to ensure their online safety so that their shopping experience is the best that it can be.”

To avoid becoming one of those unfortunate people who will have an unhappy holiday season due to cyber-scams, Forman recommends online shoppers follow these steps.

Look out for scams

When looking for deals, Forman warns shoppers to be realistic. Oftentimes, a person’s instincts are the best tool for weeding out scams from legitimate sales.
“Keep an eye out for scams; everyone loves a good sale, but if something looks too good to be true, it probably is,” said Forman.

Know what information to give

There is no cost to window shop, and the same is true online. If websites ask for personal information prior to making a final purchase, more than likely there is something wrong. Forman also advises online shoppers to look at privacy policies on websites to see exactly how websites will use the information shoppers give.

“Don’t give out more information than what is required,” said Forman. “When filling out online forms, at either checkout or other times, only give the absolute minimum required info.”

Do research

There is also nothing wrong with looking up information about retailers from which you will buy a product, according to Forman.

“Google them and see what other folks have said about their shopping experience with that company,” said Forman. “Try lots of different keywords to get to the info you want or need to see. There are many sites such as Yelp.com that offer good customer reviews.”

Make sure you are on a secured page

Forman also recommends online shoppers look to shop only on secured websites, as there is a lower likelihood of scams taking places on those websites.

“Always be sure that you are transacting across a secure connection by looking for both “https” in the address bar and the little padlock icon toward the bottom of the computer screen,” said Forman. “You can also look for emblems associated with the Better Business Bureau online, VeriSign, and TRUSTe, These emblems tell you that the retailer is trusted and meets the standards necessary for these certifications.”

Use another email address

While adding another e-mail address and password to your memory may seem like an unnecessary nuisance, Forman recommends online shoppers utilize a free e-mail service and do all online shopping with it.

“That way if the online retailer sells your e-mail address to a spammer, it won’t come to your primary e-mail address,” said Forman.

After working in executive management for over ten years with a steadily increasing salary, Rick Stephens, 51, was laid off from his job in June 2008. Two years of steady unemployment later, he has sold his car, moved in with his 75-year-old father and blown through all his retirement savings to stay afloat.

“I pay my bills with what is left of the savings I accumulated by being frugal all my life, but I’m going through that pretty fast,” he said. “I have tapped my IRA, and the result of that is I will be heavily taxed on it next April. I honestly believe that there will be no recovery from this. If there is a recovery, it will be too late for me, as I will have exhausted my savings and my retirement that I had socked away by not living the high life.”

Stephens’ predicament is an increasingly common one. Aside from stagnant wages, soaring unemployment and plummeting home values, the major tragedy of this recession is the havoc it has wreaked on the retirement incomes of millions of Americans who have planned and saved their entire lives, only to watch that money drain out of their accounts much sooner than they anticipated.

Retirement statistics are grim. The percentage of American workers who said they have less than $10,000 in savings grew to 43 percent in 2010, according to a recent survey by the Employee Benefit Research Institute. Nearly a quarter of the workforce said they have postponed their planned retirement in the past year and a CareerBuilder.com survey reports that 61 percent of workers say they are now living paycheck to paycheck, as compared to 43 percent in 2007.

With rapidly dwindling savings and fewer opportunities for jobs than their younger counterparts, many older Americans are facing a very uncertain economic future.

“This is the undiscussed explosive bomb in all this, is all the pension benefits, all the 401(k) money that’s been drained out by workers trying to stay afloat until they find a job,” Rep. Jim McDermott (D-Wash.) said, “There are a lot of people who, when this is over, are going to have nothing. They will have lost their house, they will have used all their pension money.”

Many Americans seem to be losing hope. Only 16 percent of respondents to the EBRI survey expressed confidence in their ability to retire comfortably, the second lowest point in the 20-year history of the survey.

Marguerite DiGaetano, 58, says she is confident that after two years of solid unemployment, despite having worked her whole life, she will never be able to retire.

“I think the person who invents the cubicle where you can discreetly hang your walker where it doesn’t trip anybody, that person will be very popular with the baby boomers,” she said. “Who’s gonna be able to retire at 65? That’s only seven years away. Not me. I’ll be working until I die.”

How much money buys happiness? A wide body of research suggests the number is approximately forty thousand dollars a year. Daniel Gilbert, professor of psychology at Harvard University, says once you have enough money to meet basic needs – food, shelter, but not necessarily cable —incremental increases have little effect on your happiness.

Aaron Karo, comedian and author, responds to the number with, “If you want to draw a line in the sand, happiness is having enough money so you don’t have to move back in with your parents.”

To someone who just spent four years in college living off nine-thousand-dollar loan stipends, an increase to forty thousand means a lot – moving from poverty to middle class. But it’s a one-time rush. After you hit the forty-thousand-dollar-range money never gives you that surge in happiness again.

Twentysomethings who are looking for happiness from their careers will benefit from research about their parents’ choices. Richard Easterlin, professor of economics at University of Southern California says previous generations have proven that our desires adjust to our income. “At all levels of income, the typical response is that one needs 20% more to be happy.” Once you have basic needs met, the axiom is true: more money does not make more happiness.

So then one asks, what does matter? The big factors in determining happiness levels are satisfaction with your job and social relationships. And in case you found yourself slipping back to thoughts of salary, according to Easterlin, “How much pleasure people get from their job is independent of how much it pays.”

Unfortunately, people are not good at picking a job that will make them happy. Gilbert found that people are ill equipped to imagine what their life would be like in a given job, and the advice they get from other people is bad, (typified by some version of “You should do what I did.”)

Gilbert recommends going into a career where people are happy. But don’t ask them if their career makes them happy, because most people will say yes; they have a vested interest in convincing themselves they are happy. Instead, try out a few different professions before you settle on one. For college students, Gilbert envisions this happening with part-time jobs and internships at the cost of “giving up a few keggers and a trip to Florida over spring break.” But even if you wait until you enter the workforce, it makes sense to switch from one entry-level job to another; no seniority and scant experience means you have little to lose. So it’s an ideal time to figure out what will make you happy: Use a series of jobs to observe different professions at close range to see if YOU think they make people happy.

It’s simple, proven advice, but few people take it because they think they are unique and their experience in a career will be different. Get over that. You are not unique, you are basically just like everyone else. Gilbert can, in the course of five minutes, rattle off ten reasons why people think they are unique but they are not. For example: We spend our lives finding differences between people to choose teachers, band mates and spouses, so our perception of peoples’ differences is exaggerated… And then Gilbert gets to grapes: “If you spend seven years studying the differences between grapes, no two will look the same to you, but really a grape is a grape.”

So your first step is to stop thinking you’re a special case. Take Gilbert’s advice and choose a career based on your assessment of other people in that career. You next step is to focus on social relationships, because in terms of happiness, job satisfaction is very important but social relationships are most important.

And by social relations, most researchers mean sex – with one, consistent partner. So consider giving your career aspirations a little less weight than you give your aspirations for sex. For those of you who like a tangible goal, David Blanchflower, professor of economics at Dartmouth College says, “Going from sex once a month to sex once a week creates a big jump in happiness. And then the diminishing returns begin to set in.” He adds, to the joy of all who are underemployed, “It’s true that money impacts which person you marry, but money doesn’t impact the amount of sex you have.”

Maybe all this research simply justifies the twentysomething tendency to hold a series of entry-level jobs and put off having children. Says Karo: “All we really want is to get paid and get laid.”

Eating out is one of the many pleasures of life and a great convenience when you’re too tired or swamped to cook, but it’s also one of the biggest budget busters. If you’re looking to cut your costs, you don’t have to sacrifice dining out altogether, though. Here are some tips and resources to eat out for less.

Use Restaurant Coupons

Daily deals sites are obvious sources for dining discounts. You’ll be able to find plenty of deals offering you 50% off.

There may be etiquette rules for using certificates like these or daily deals coupons for certain occasions, or perhaps you’re not comfortable using coupons to dine out. Coupons like the ones above also have a drawback in that there are usually minimums required, sometimes causing you to spend more than you might have otherwise. Fret not! There are still other ways to save.

Join Restaurant Loyalty Programs or Use Reward Programs

Many restaurants have email lists that advertise specials for their loyal members. If you have a favorite restaurant or two, see if they have an email list and sign up for it.

You can also get some freebies for your birthday and dine out for free almost your entire birthday month at many other restaurants in exchange for your email address.

Several restaurant dining rewards programs give you a bit of cash back for eating out:

Time When You Dine Out

The time of day, week, and year you go out to eat can also affect how much you spend. For example, you might save by reserving your fine dining times to Restaurant Week, when participating restaurants offer prix fixe specials for lunch and/or dinner.

Some restaurants also offer “early bird specials” (dinner before 6 pm, for example) or mid-week specials.

If you’re eager to try a new restaurant that’s a bit expensive, maybe go there for lunch to get the same experience and a taste of what it offers.

Order Wisely

Alcoholic drinks are usually the most expensive part of the meal, so one big way to save is to have the glass of wine at home instead of at the restaurant or look for restaurants that are BYOB.

Other common sense tactics:

• Save dessert for home
• Share a big meal or go for the family style restaurants
• Don’t order the kid’s meal if your kids are really young and won’t eat it. Bring something they will eat.
• Don’t order dishes that are hard to reheat or won’t be good as leftovers the next day (in case you won’t be able to finish the meal and will be taking it home in a doggy bag)

While ordering the cheapest thing on the menu is one strategy for saving, another strategy for getting the most value when dining out is to order the dishes that are harder (or less common) to make at home. I’ll choose the duck, for example, over chicken or the “homemade” lasagna over a burger.

Those are just a couple of ways to get more out of eating out. How do you enjoy yourself without spending too much? Share your tips with us in the comments.

What is the best way to start a budget?

The first thing that anyone who wants to make a budget must do is to compare their income versus their expenses. The good thing is that it is quite easy to do.

It’s too bad most of us never learned this in school and had to figure it out on our own – so here is the lesson that we should have learned in 5th grade:

Expenses > Income = Bad | Expenses < Income = Good

And honestly, as simple as it sounds, that is the key to wealth. Anyone, and I mean anyone, who IS wealthy (I emphasize IS because I am not talking about people who appear to be wealthy, but who are actually in debt up to their eyeballs) spends LESS money than they earn. AKA – their expenses are less than their income.

The great news about this is that anyone can do this – no matter what their income level. If you can do it on a small income, then you can do it on a large income. If you can’t do it on a small income, then you won’t be able to do it on a large one either. Trust me!

If you don’t believe me, just ask all of the lottery winners who went bankrupt within years of winning millions of dollars.

Back to making our budget…

Regardless of how your expenses and income compare right now – get excited, because you can easily change it!! If it is bad you can make it so much better!! If it is good, you can still make it even better!! I will show you how later, but for now…

Let’s make a budget!

Did you calculate what your monthly expenses and income were? Were your expenses less than your income? If so, you are a rare breed who is in great shape, so just sit tight for a minute.

For everyone else, whose expenses exceeded your income – you are not alone. You actually have a lot of company. The problem is that it isn’t good company! Most of our debt-ridden society is in the same boat, but you are one of the bold ones who is jumping out of the debt boat!!

So, if your income is $1000 and your expenses are $1200, that means you spend an extra $200 each month that YOU DON’T HAVE!! What your job is now is to find out what you can get rid of or quit buying each month to save that $200. If you have no idea where to start you can check out these money saving tips or browse other money saving ideas.

I know, I know – this is the part that hurts. Just like pruning a bush – cutting back hurts, but ultimately you are going to yield so MUCH more fruit because of it!!

The goal here is to get your expenses and income to AT LEAST be equal. Once that is accomplished we can work on eliminating wasteful spending or cut other costs to bring the expenses below the income.

Now that you have calculated what your monthly income and expenses are we can start designing our budget. We will first discuss the less effective, but easier method for budgeting…

The world’s easiest budget

There are 2 simple rules to do a simple budget:

• You can’t spend more than you earn – carrying a balance on a credit card is not allowed.
• Money must go to the budget categories as soon you get paid.

The way it works:

Rather than having 10-20 different categories of items to be budgeted for you only focus on the 1-3 most important ones and let the rest of the chips fall where they will.

So, to do this you take your paycheck of say $1000 and right off the top you put the money to your main priorities. For many people this is tithing to their church, retirement savings, college savings for children, etc…

An example of this would be:

$1000 (paycheck)

-$100 (tithe)

-$100 (retirement savings)

= $800 (for the rest of the bills and everything else)

It is absolutely critical that the money gets taken out FIRST for these few budgeted items. If not, I can almost guarantee that the full amount will not make it as intended.

I highly recommend making this process automatic by using direct deposit or some other form of automatic withdrawal. There is just something about human nature that has a hard time staying consistent with things like this.

Why do you think the U.S. government takes our taxes directly out of our paycheck, rather than coming to collect the full sum at the end of the year? It is the same principle – use it to your advantage.

Easy budget, but not very efficient

I think this budget is perfect for people who don’t want to budget. It is simple, doesn’t take up much time, and will help you reach some savings goals. That said, it is still inefficient and leaves the door wide open for inefficient and foolish spending.

I think it should be considered the “lazy man’s budget” – and you are not LAZY, you are willing to work to get your finances in order!! I know this because you are still reading. So, since you are NOT lazy and are hungry for more of a challenge, let’s look at how the pros budget.

The money saving budgeting method

Yes, this method takes a little bit more time and energy, but it also will provide you will long-term financial benefits if followed.

To do this we are just going to expand on the lazy man’s budget mentioned above. Rather than having just 1-3 categories of items budgeted for, we are going to create as many as we need to put a limit on our spending in all areas.

You can use the mentioned budget spreadsheet as a guide for tracking your progress. Try to account for every possible expense that you could run into. You will never be able to budget for every possible scenario, but the goal is to minimize surprise expenses. Inevitably, there will still be surprises from time to time – so I suggest creating a category for these surprises (or you can just use your emergency fund).

How to stick with your budget

The almost sure-fire way to make a budget that fails is to NOT budget for any fun stuff. I wrote about how budgeting should be fun and it is a necessary ingredient for success. You need to budget for clothing, entertainment, going out to dinner, or whatever else it is you love to do! The key is to do it in moderation and to set limits and abide by them.

The amazing thing is that by budgeting for fun stuff, it actually liberates you to spend money on these items. When you have money budgeted each month to buy clothes, the money is now sitting there waiting to be used for that assigned purpose. Suddenly you can go clothes shopping without feeling guilty!!

This is how budgeting truly becomes fun. When you have money sitting in the bank waiting to be spent. Or, even better: if you start budgeting for vacation and after a little while you have hundreds of dollars begging to be spent on a vacation!! You go on your trip and come back home and don’t owe any money to a credit card company – now that is how a budget becomes fun and what helps you stick with it!!

I would love to hear what has worked for you and what hasn’t. Let me know in the comments below…

While there’s usually nothing wrong (and a lot right!) with having a positive and optimistic outlook on life, when in comes to your personal finances such optimism may not be a great idea.

No one knows this better than Wall Street executives. When the top brass fail to deliver the results that they promised — even if it was a lowball promise — the backlash can be brutal. Consider:

Financial executives know the wisdom of this approach well. When they fail to deliver what they commit to–even if it’s a low-end commitment–the resultant backlash can be devastating. For example:

Dry bulk shipper DryShips (DRYS) saw its shares drop more than 12% intraday after reporting results in late August that were significantly below estimates. In late August, OmniVision Technologies (OVTI), indicated that it expected to take in around $255-$275 million in its second quarter. Analysts had expectations of more than $300 million. Boom — just like that shares plunged roughly 30%. On a more positive note Sirius XM (SIRI) posted revenue results slightly below analysts’ estimates. However, it made up for this on earnings, which were roughly triple those expectated. The company’s shares, which had closed at $3.11, opened the next day at $3.18.

For most companies, a few shocking earnings reports won’t totally make-or-break their financial futures, and stock movements don’t always last for long. However, such examples do suggest, as Seneca and Benjamin Franklin both agree, that there’s something to be said for actually planning for the worst and then being pleasantly surprised when you’re able to beat expectations.

Promise Less and Deliver More

The best approach with financial matters is to hope for the best but plan for the worst; in other words, underpromise and overdeliver.

What does this look like in practice? Well, start with the knowledge that the stock market, over much of the past century, has averaged about 9% or 10% annual returns. But that’s no guarantee of future performance, and many expect the coming decades to feature a lower average.

When calculating what you need for your nest egg, build in conservative estimates. Instead of 10%, use 6%. Lower returns mean you’ll most likely have to save more; find out how much more. (Think of the “interest rate” as the rate at which you expect your investments to grow.)

For example, if you have $50,000 socked away and you expect to add $5,000 annually and earn 10% over the coming 25 years, you’ll end up with about $1.1 million, which might provide for a pleasant retirement. But if you expect to earn just 6%, your $50,000 and $5,000 additions will amount to only $505,000, less than half as much. Adjust your annual investment to $10,000 and presto — you can expect to accumulate nearly $800,000.

Even if you end up averaging an even lower return, by having increased your investment amounts, you’ll end up with more money than you would have originally. And if you end up with 10% returns or more, great! You’ll be able to live higher off the hog in retirement, or will be able to leave more to your heirs.

Prepare and plan for a challenging few decades ahead, and your portfolio may surprise you by growing larger than you expected. By underpromising your growth rate to yourself, you set your nest egg up to have a good chance of overdelivering.