5 Ways to Save Money in Retirement

In retirement, it's time to spend wisely.
With retirement, you're dealing with a phase of your financial life where you have a limited amount of money and no concrete idea of how long it must last. With finite resources, you must be mindful of your spending so you won't outlive your money and so you'll have the funds for the things most important to you.
"By the time people are ready to retire, or have already retired, they should have a very current picture of what their spending is," says Tim Kober, a certified financial planner with Cedar Financial Advisors in Portland, Ore. "There's the problem of spending going up in the initial part of retirement when people do all the deferred things that they've been wanting to, and it's important that they don't overdraw their nest egg to make all those nice things happen."
Retirement has many stages, and not every stage is one where you'll want to splurge. But it's important to realize that you may spend more initially, and budget accordingly. As you get things like the travel bug out of your system, spending may go down. But other expenses, like health care, may increase.
Time to Face Realty
A potentially emotional decision about retirement expenses is a possible need to downsize your housing, says Kober. Although adult children may be emotionally attached to the old homestead, "you may need to have the brutal, honest conversation with your family and say, 'This isn't a long-run sustainable housing situation.' You can reduce your housing costs and spend more time and money on leisure activities."
Gordon J. Bernhardt, CPA, a financial planner with Bernhardt Wealth Management in McLean, Va., agrees. Many consumers bought too much house or spent too much money on rental properties during the real estate boom and now may face a cash flow problem in retirement. "Is the individual overextended? Did he or she buy too much real estate and is facing the consequences of negative cash flows? In the cases we have seen, that individual is still above water, but selling the property will help their cash flow."
But remember there are a number of costs involved in moving, including real estate commissions and potentially higher property taxes. Also, according to Bankrate's 2010 Closing Costs Survey, average closing costs on a $200,000 home were $3,741.
Do Expense Accounting
Experts say one golden rule of retirement should be "Plan what you spend, spend what you plan." "Too many people don't have a budget," says Michael Kay, a certified financial planner who's president of Financial Focus in Livingston, N.J. "You need to know which costs are fixed costs, and which costs are discretionary. It's the discretionary costs that you choose, that you can trim."
Before you can cut your discretionary spending, you have to know how much it is. So keep track on what you're ppending for frills like entertainment, travel or impulse purchases.
Dining out is one place to put your budget on a diet, says Bernhardt. "Our clients have shared that they did not realize how much money they spent on eating out until they changed their habits and ate at home more often," he says. "And they did not feel like they were making a significant sacrifice."
Be Present-Minded
Grandparents and parents, naturally, want to lend a financial hand to their descendants. But it's not a good idea if it imperils your ability to stay financially solvent in retirement. Take a hard look at any outright cash gifts that you are giving, or expenses like private school tuition or summer camps that you're covering.
"Some of our older clients have reduced their annual gifting to reduce the withdrawal rate from their portfolios," says Bernhardt. "It's nice to be able to help out the grandkids, but you don't want to risk running out of money."
Go to the Goals
Whether you're already retired, or about to be, you need to periodically re-evaluate your personal spending goals. "You start with your core beliefs, what's important to you, and then you take a look at your financial reality," says Kay. "Then you may have to say, 'OK, do I need to make changes in my discretionary spending or do I need to make structural changes, like in where I'm living?'
"Some people might say, 'It's really important for me to live near my grandchild, and I'm willing to give up some discretionary spending to do that,'" Kay says. Others might conclude that some cuts in structural expenses are worth it in order to send a grandchild to summer camp.
The bottom line, Kay says, is that you must have a game plan to achieve your goals.
Drive a Bargain
After housing, cars are one of a consumer's biggest expenses. "People don't think about operating costs and the total costs of owning a car, including repairs, insurance and maintenance," Kober says.
Kober notes that couples can save money by cutting back to one vehicle. Also, retirees might employ other creative strategies like renting a cheap car for long trips instead of putting more wear and tear on their own set of wheels.

Copyrighted, Bankrate.com. All rights reserved.

5 Mistakes You May Be Making in Your 401(k)

Some might believe that making contributions to a 401(k) plan during your working years will provide enough money for retirement. Somewhere over the rainbow, there's a pot of money waiting for you. Unfortunately, no one is going to hand over a lump sum that will cover all of your living expenses when you stop working. This is just one of the common mistakes that people make when it comes to their 401(k) plans. Here are some of those blunders, and how to improve your chances of reaching your retirement goals:
1. You don't make any changes in your 401(k). Many workers sign up for a 401(k) plan when they start a job, and then don't pay any attention to their investment selections afterward. Studies have shown that just one in six 401(k) participants ever changes investments in their plan. Your retirement plan is not a "buy and forget" investment. Be proactive with your 401(k) by checking your investments every quarter, and making sure the funds you own are still meeting your expectations and are still the best of those available. It's a lot like getting your car serviced -- every few months, your car needs an oil change, and maybe a tune up.
2. You make too many changes in your plan. Some investors respond to day-to-day headlines and fluctuations in the market and feel like they have to move with them. Making too many changes based on emotions can cause you to take short-term actions that end up causing you to sell low and buy high, the exact opposite of the best strategy for opportunities to get higher returns. Say you're seeing the Dow Jones Industrial Average drop 100 points one day, and you sell your stock funds. The next day, the index gains 150 points, and the funds you sold are rallying, too. If you want to buy them back, you'll have to pay the higher price. Try to sit still and don't let your emotions rule -- otherwise your plan will get off track.
3. You don't have the right asset allocation. You won't have to make many changes to your 401(k) if you start with the right mix of different kinds of stocks, bonds, and cash. Some people get stuck when they have to choose mutual funds for their plan. Don't ask your parents, spouse, or friends about which funds you should pick. First, figure out your asset allocation and risk tolerance. Then examine the funds offered in your 401(k) plan and pick the ones that fit. Many mutual fund companies have general asset allocation recommendations (conservative, moderate, aggressive) to guide you, but your selections don't have to follow any set of rules. It may be worth the cost to hire a certified financial adviser to help you choose a diversified mix of funds that meet your specific needs. An adviser will also monitor those selections each quarter and help you make changes when needed. Depending on market conditions, you might have to re-balance your portfolio a few times a year to make sure your asset allocation stays intact, or adjust your asset allocation if your needs change.
4. You're chasing performance. Many investors crowd around funds that performed the best last year. They buy the fund at the peak price, only to be disappointed that the fund can't keep going up. Don't fall for the best performers of the moment. What you really want to know is which funds are going to do well next year. Given that no one knows for sure which areas of the market are going to be winners, it's best to be diversified among many different kinds of stocks and bonds and stick with your asset allocation. That way, you should be able to earn more when the market goes up and lose less when the market goes down. This is because a diversified portfolio is designed to avoid having all eggs in one basket, so while it can prevent losing more than the market during a market decline, it cannot produce more than the market during an upsurge.
5. You're not saving enough. Many companies will match employees' 401(k) contributions up to 3 percent of their salary, so that's all many people contribute. That may not be enough. Contribute 6 percent or 7 percent of your salary, or even more if you can. If you get a raise, put half of it into your 401(k). Use a retirement calculator, such as the one at Mutualfundstore.com, to help determine how much money you'll have at retirement. Many advisers used to estimate that people would need 60 percent to 70 percent of their income to retire comfortably. However, that might not be enough given that many people plan to be more active and travel in their golden years. Plus, people are living longer, and could face higher medical expenses. That's why you need to start saving and contributing as much money as possible to a 401(k) when you're young, and continue the discipline throughout your working years.

Secrets to a Richer Retirement

With stock returns projected to be low and pensions going the way of Lindsay Lohan's career, retirement planning can seem awfully daunting these days. You can't change the market or your employer's largesse.
But there is one factor you can do something about: you. You can be your own worst enemy, buying what's hot only to sell in a panic or wildly overestimating how long your money will last.
"Our brains are hardwired in ways that are the opposite of what we need to invest well," says Carnegie Mellon economics and psychology professor George Loewenstein.
Fortunately, a new wave of research is emerging from the still-young field of behavioral finance -- a blend of psychology, neuroscience, and economics -- that gives better insight into how your unconscious can help or hurt your financial future.
Though much of the work is still in progress (retiree avatars, anyone?), it suggests specific moves you can make before and during retirement to avoid your worst tendencies and get the most from your best intentions.
Secret #1: Get a Good Picture of the Future You
You probably imagine that when you're retired, you'll be pretty much like you are now -- maybe with a new fondness for early-bird specials and PBS wellness shows. But studies show that the present-day you doesn't really identify with this future person very much.
In fact, "your mind creates neural patterns similar to those created when you think about a stranger," says Northwestern University researcher Hal Ersner-Hershfield. That disconnect means you're reluctant to trade rewards today for rewards tomorrow -- the biggest hurdle to saving for retirement.
Behavioral scientists wondered: Could creating a better picture of your older self help you improve focus on your long-term goals? Researchers at Stanford University recently tested that question.
They put two groups of college students in virtual reality headgear and had them interact with life-size versions of themselves. (Each student shared a room with his or her avatar, which mirrored that person's movements.)
One group of students saw themselves at their current age; the other saw themselves age-morphed to appear 70 years old. Then the researchers asked how much the students would save for retirement. Those in the latter group said they would save twice as much, on average, as the other.
Experts are now building online tools to help you do such visualizations. Example: Ersner-Hershfield and colleagues are testing software that changes your photo as you move a slider to select different savings levels.
If you choose a low savings rate, your current photo will look happy (I can spend more now!), but your older one will look sad (my nest egg is shrinking!). So far they've found that people who see older, sadder versions of themselves choose to save 6.75% of salary, on average, vs. 5.2%.
Put these findings into action:
Write It Down
While you're waiting for such a slider to hit the Net, do a lower-tech exercise. Imagine the retirement future you want -- house by the lake? annual trips to Italy? worry-free sleep? -- in as much detail as possible. Then write down how you feel about that future. "It's not just imagining, but the act of writing, that helps you to focus your thoughts and take action," says Alessandro Previtero of the Ivey School at the University of Western Ontario.
Think of Gramps or Nana
"The grandparent of your sex who you most closely identified with can be a great proxy for your future self," says Ersner-Hershfield. Calling him or her to mind can lead people to budget better and save more, Northwestern researchers found.
Secret #2: Try to Beat the Other Guy
Thanks to your normal natural competitiveness, comparing yourself to others can speed you to your goals -- just look at TV's The Biggest Loser.
This strategy has definite potential in retirement planning. Preliminary research suggests that people who see data showing how their peers are saving are more likely to participate in their company retirement plans and to put more money in.
Thanks in part to these findings, financial services company ING recently set up a website that allows people eligible for some 401(k) plans it administers to compare their progress against that of their colleagues.
So far more than 20% of people who have spent time with the tool have made a positive change, such as joining the plan or upping the percentage of salary they contribute, says Ashley Agard, head of retirement research at the company.
Your peers can be powerful in another way too: They can put pressure on you to meet your goals. So-called commitment strategies, in which people publicly proclaim their intention of hitting a target, are often effective for those seeking to lose weight or stop smoking.
Now researchers are looking at how well they work to help increase saving. In 2008 Yale professors Ian Ayres and Dean Karlan launched StickK.com, a free website that lets users make a public or private commitment for just about any kind of goal.
To up the pressure still more, users can bet money on the outcome. The researchers need more data to show how well the approach works for retirement-related commitments, but early results are encouraging.
Put these findings into action:
Benchmark Yourself
You can start at INGcompareme.com, a public website run by ING. There you compare your financial status -- free and anonymously -- with those of nearly 140,000 other users who have similar ages, incomes, and other details.
Does your savings level fall short? Get moving! Are you way ahead? Great, but just because you're beating your peers doesn't necessarily mean you'll meet your goals, warns Jack VanDerhei, research director at the Employee Benefits Research Institute.
To see if you've succeeded in hitting recommended savings benchmarks, check out our retirement checklist.
Make a Commitment Contract
You could do anything from telling a few friends about your savings goal and asking for their support -- perhaps meeting once a month -- to placing a bet in public that you'll succeed in reaching a certain saving level by a certain time. You can broadcast your pledge via social media such as Facebook or Twitter. Or use StickK.com.
Secret #3: Use reminders and checklists
Human beings are prone to distraction by immediate events -- helpful in the days when an angry wildebeest might interrupt your dinner, but not so much when you're planning for retirement. "Reminders are one of the simplest, lowest-cost ways to cut through distractions and stay focused on your goal," says Yale's Karlan.
He and other researchers working with banks in Peru, Bolivia, and the Philippines looked at the impact of sending account holders reminders to save by text message or postcard. The savers who got those messages put away as much as 16% more.
Checklists are another effective tool to help you stay on task. As Harvard surgeon Atul Gawande pointed out in his 2009 book, The Checklist Manifesto, the simple act of going through one of these lists can help you avoid missing a vital step.
When surgeons and airline pilots began using them, hospital infection rates and pilot error declined. No wonder so many financial advisers rely on checklists for clients nearing retirement.
Put these findings into action:
Arrange Automatic Prompts
It's easy: Just set e-mail alerts in your digital calendar or via a personal finance website such as Mint.com. The most effective, says Karlan, are as specific as possible ("put $1,000 in my Roth IRA on Dec. 1," not "save more for retirement"). Arrange for them to hit your in-box at tax time, at bonus time, and after your year-end statements arrive (to prompt you to rebalance).
Put a Reminder Where You'll See It Every Day
Remember that Northwestern study showing that thinking about a grandparent can help you save? Study subjects wore wristbands with the acronym WWGD (What Would Grandma/Grandpa Do?) written on them. Hokey, sure -- but effective. Placing a reminder of your goal where you'll see it day in and day out (a photo of your dream retirement house by your bed, for example) could have a similar effect.
Secret #4: Think in Bite-Size Pieces
Use a Retirement Checklist Each Year
For one tailored to your age group, try ours.
Your 401(k) plan has likely trained you to think about building a single lump sum. But even savvy investors tend to overestimate how long such a sum will last.
When you look at a dollar figure, explains Princeton psychology professor Eldar Shafir, you're inclined to focus on its nominal value rather than on its total purchasing power, which will be eroded by inflation.
Experts call this phenomenon "the money illusion." And they've come up with a technique to correct it, known as reframing. Instead of focusing on the total sum, focus on the monthly income that the sum will create during your retirement years.
"People understand how much money they need each month, so it makes the saving process more relevant," says UCLA behavioral finance professor Shlomo Benartzi.
The idea is catching on. Financial services firm Putnam, for example, recently redesigned the website and statements for the 401(k) plans it administers to prominently display monthly income projections rather than total balances.
Put these findings into action:
Run the Numbers
Estimate your monthly retirement income by using the calculator at troweprice.com. Compare that amount with what you'd like to spend. Falling short? Ramp up saving, cut spending, or postpone retirement (or all three).
Tweak Your Investment Mix
Inflation, tame now, could increase dramatically over the years, warns Marilyn Dimitroff, a financial adviser in Bloomfield Hills, Mich. One way to limit the damage is to increase the amount of money you keep in dividend-paying stocks.

Retirement investing: Don't abandon stocks

(MONEY Magazine) -- Question: My wife and are in our mid 30s and have begun aggressively contributing to our 401(k) and a Roth IRA. I know we should be looking long term, but it's discouraging that our account balances are lower than they were earlier in the year. If we had just stuffed the money under our mattress, we wouldn't be sitting on a loss. Should we keep investing in this market or go with the mattress theory? -- Daemon Fields, Eustis, Florida
Answer: I don't blame you for feeling discouraged. If you're serious about building a nest egg, it's hard not to feel disheartened these days.

After all, despite a rally since the end of August, stock prices are still down from their levels earlier this year, not to mention more than 25% below where they were nearly 10 and a half years ago.
So I can see why you might think that simply sticking cash under the mattress -- or, more realistically, investing it in something secure like Treasury bills or FDIC-insured CDs -- might be better than tying your retirement prospects to the stock market.
But I think you would be making a mistake to give in to the understandable urge to abandon stocks.
For one thing, when you're investing for retirement, you really do have to focus on the long term, and I mean really long term when you're only in your 30s.
To get an idea of why that's the case, let's take a look at an episode in U.S. stock-market history that's even worse than anything we've seen in our lifetime -- the Crash of 1929.
If you had invested, say, $1,000 in stocks when the market was at its peak in late August-early September of '29, you would have been sitting on a loss of about 83% by the time the market bottomed out roughly half way through 1932. In other words, your thousand bucks would have been worth only about $170.
What's more, it would have taken a long time for you to recover from that setback. Assuming you held on and reinvested dividends, you wouldn't have gotten back to even until the beginning of 1945.

But if you had held on until August of 1959 -- in other words, for 30 years, or about the same length of time you have from now until you and your wife will retire -- you would have earned an annualized total return of about 7.8% and your original grand would be worth just over $9,500.
Granted, had you invested in secure T-bills over that period, you wouldn't have lost any money in the crash. On the other hand, by the end of that 30 years, you would have earned only an annualized 1% or so, which means your original $1,000 would have been worth only a little over $1,300.
But this example shows only what would have happened to a single sum invested at one moment in time, that moment being the top of the market. When you're saving for retirement through 401(k)s, IRAs and the like, however, you're not investing all your money at once. You're periodically investing small sums. Which means you're effectively earning different rates of return on each 401(k) and IRA contribution.
Thus, while you would have earned 7.8% annualized on $1,000 invested at the top of the market in 1929, a $1,000 investment in stocks at the bottom of the market in 1932 would have earned an annualized 16% by August, 1959.
In short, over the course of a long career, you're going to earn a variety of returns on the money you invest, some lousy, some middling, some spectacular. You can never be sure what returns stocks will deliver. But as Ibbotson Associates founder Roger Ibbotson told me in a recent interview, the more fearful people are about investing in stocks, the higher the returns stocks are likely to generate going forward.

0:00 /3:04Enjoy life and save for retirement

The point, though, is that I don't think it pays to get too caught up over the return at one particular point it time, whether it's fabulous or horrendous. What counts is how large a nest egg you'll eventually have to support you in retirement.
I want to be clear that I'm not trying to play down the risks of investing in stocks. They are definitely risky. Stock prices can fall precipitously and they can stay down for a long time. And even though history shows they have rewarded investors handsomely over long periods, those returns are anything but certain.
That's why, even if you're OK with the case for investing in stocks over the long run, your retirement portfolio shouldn't be invested entirely in stocks. You also want to be sure to scale back your stock stake as you approach retirement -- and continue doing so after you retire -- to avoid seeing your savings get decimated late in late in life when you don't have as much time to recoup losses. That's the theory behind target-date retirement funds.
Of course, you could chose to build a nest egg without stocks by investing solely in more stable alternatives like bonds and cash equivalents.
So as I see it, you have a choice. You can do the investing equivalent of keeping your money under your mattress and avoid stocks. Or you can take what I consider a prudent level of risk and include stocks in your long-term retirement investing strategy.
I'll grant that you may sleep better now with the Sealy approach. But unless you're willing to really rev up your savings effort, I doubt you'll sleep as well during retirement. 

Fastest Growing Jobs in America

How will the job market evolve in the next decade? Fortune takes a look at some of the fastest growing professions in the U.S.
Nurses
The number of registered nurses is expected to swell to 3.2 million by 2018, accounting for approximately 581,500 new jobs, according to the Bureau of Labor Statistics. That's up from 2.6 million today, and it represents the largest overall growth projection out of all occupations in the U.S. economy, for good reason.
Americans aged 65 and older will make up 19% of the population in 2030, up from 12.4% in 2000. As the population ages and the growth of the working-age population slows down, there will be an increased demand for health care services in general, and home health care services in particular. In the past year, the home health care services industry has experienced sales growth of 11.2%, making it the fastest growing industry in the U.S., according to Sageworks, a financial analysis company.
Along with registered nurses, Sageworks projects that home care aids, physician assistants, pharmacists, and other medical professions will be in high demand for the foreseeable future.
Network Systems and Data Analysts
This occupation's full title is "network systems and data communication analysts." And while it's a mouthful, it is worth remembering as it's the second-fastest growing occupation in the U.S., according to the Bureau of Labor Statistics. In simpler terms, these analysts are the folks who design and build the systems that we use to connect to the web, from work or home.
In many ways, these are the folks that make communication possible in our Internet-centric world. So perhaps it's not so surprising that they are in high demand, and will be for the foreseeable future. BLS's latest employment outlook report estimates that the profession will grow by 53.4% to almost 448,000 workers between 2008 and 2018.
Software Engineers
What would all that planning and design by network and data analysts be worth without software? Not a whole lot, which explains why the BLS expects the cadre of software engineers and application developers to swell to 689,900 by 2018 (up from 514,800 in 2008). Whether they are building business software, constructing an operating system, developing games, or designing mobile apps, software engineers have a wide array of career avenues to consider.
And it surely does not hurt that the worldwide smartphone market grew by 50% between the second quarter of 2009 and 2010, according to the market research firm IDC. The impressive growth of the smart mobile industry over the past few years will only add fuel to the fire of the impressive job prospects for application developers, as smartphone users have come to expect increasingly advanced software applications to justify the increased expense of their phones.
Biomedical Engineers
Biomedical engineering is expected to be the fastest growing occupation, with a whopping growth project of 72% between 2008 and 2018, according to the Bureau of Labor Statistics. It's not much of a surprise, given that this field lies at the nexus of technology and health care, two ballooning industries within the U.S. economy.
The immense growth of biomedical engineering will be driven by the demand for new treatments for diseases and the increasingly higher expectations of aging patients to maintain an active lifestyle. Indeed, the pharmaceutical and medicine manufacturing industry experienced 11.1% sales growth in the past year, according to Sageworks.
From developing artificial organs, medical devices like pace makers, or refining imaging technology that allows doctors to examine patients in more precise ways than ever before, biomedical engineers will have plenty to work on in the coming decade.
Accountants and Auditors
While number crunching and bean counting has certainly not fallen out of style in recent memory, the economic fallout of the past few years has placed renewed focus on financial regulation. And with the passage of the federal financial reform bill in June, companies will need an even larger cohort of auditors and accountants to parse through new regulations to make sure they are in compliance.
The accounting profession is poised to experience 22% growth between 2008 and 2018, with an anticipated 279,400 new jobs in the field by 2018, according to the BLS.

Veterinarians
Our love for the dogs, cats, and fish in our lives truly knows no bounds. Pet care was one of the only sectors of the retail industry that grew during the recession.
According to the 2009-2010 National Pet Owners Survey, 62% of U.S. households owned at least one pet in 2008, accounting for approximately 71 million households. And the American Pet Products Association estimates that pet owners will spend almost $48 billion on their pets. Just under $24 billion of that will be spent on medicine and veterinary care, as more Americans than ever before open their wallets to spring for treatments for an ailing animal family member.
It's no surprise, then, that veterinarians are listed as one of the fastest growing professions in the U.S. -- the number of vets is expected to expand by 36% between 2008 and 2018.

Ten Ways to Save Money by Going Green

 It's been the hottest summer on record, from New York to Tokyo. Russia is scorched earth. This year's global temperatures may surpass those of 1998: If so, that would mean the two hottest years on record have been in the last 13.
The National Academy of Sciences recently published a survey of nearly 1,400 climate researchers worldwide. About 97% believe that we are causing global warming. (Meanwhile, the deniers cling to their peculiar upside-down logic: "You can't prove for certain that my house is going to catch fire, so fire codes are a total waste of time, and there is no point buying an extinguisher.")
If you're worried about the environment, here are 10 "green" moves you can make that also have a payback—they'll help the earth and your wallet.
1. Stop the energy leaks from your home. Just over a fifth of U.S. energy consumption happens at people's homes, says the Department of Energy. That costs the average homeowner $2,400 a year. Half of that goes to heating and cooling, much of which is pure waste. Insulate ceilings and walls. Seal cracks and gaps. "Often people have so many small leaks around the home that it's the equivalent of having a three-foot by three-foot window wide open," says Kateri Callahan, president of the Washington-based nonprofit Alliance to Save Energy.
2. Change your light bulbs. The typical household has 46, says the Department of Energy. But only five of them are energy-efficient compact fluorescents. These can cut light bills by 75%. Don't like CFs? Matt Patsky, veteran green investor and the CEO of Trillium Asset Management, says new LEDs are much better still. They cut energy use by 95% and emit a much softer light. They're more expensive, but prices are coming down pretty quickly.
3. Stop heating an empty house. Or a house when everyone is asleep. Get programmable thermostats. They can cost as little as $50. "They typically pay for themselves in three months," says ASE's Ms. Callahan. They can cut your heating and cooling bills by 10%, she says, without any effect on your comfort at all. Turning down the thermostat in winter (and up in summer) a little helps too: Experts say each degree can trim 2%-3% from your heating bill.
4. Rethink your appliances. Replace any old ones with new, energy-efficient models. The older your current fridge or washing machine, the faster the payback. The more efficient models today have an EnergyStar seal from the Department of Energy. They typically use about 30% less power than a model without the seal, experts say (more details at wwww.energystar.gov). As for your TV: The bigger the screen, the more power it's using. How big do you need? Do you really want to see, say, a life-size Snooki when you're watching "Jersey Shore"?
5. Stop leaving your computers and home entertainment systems on standby overnight. The screen's black but they're still sucking power, needlessly. Power strips make it easier to switch everything off at once, and new smart strips make it easier, for example, to power down the TV while leaving the TiVo connected.
6. Make the most of your green taxpayer incentives. For example, Uncle Sam is offering to pay up to $1,500 of your costs on things like insulation or better-insulated windows, although the program expires at the end of this year. Your state government may provide additional incentives. The best overall guide to these deals is available at DSIRE, the Database of State Incentives for Renewables & Efficiency.
7. Tackle your hot water heater. It's one of your biggest energy users. Put insulation around the heater and the pipes. And dial down the thermostat. They are often set at 140 degrees. That's way too high: The Energy Department suggests turning it down to 115 to 120 degrees instead.
8. Drive a more-efficient car. How wasteful are we on the roads? I once watched a young woman drive through the cobbled streets of Boston's historic North End in a monstrous, gas-guzzling Hummer. She looked sillier than Michael Dukakis in that tank. What are we thinking? Super-efficient hybrids can be pricey, but Jessica Caldwell, director of pricing and analysis at car experts Edmunds, says there are a lot of deals around at the moment that can bring the price down. And you don't have to go hybrid: Ms. Caldwell notes the small Nissan Versa gets 29 miles to the gallon and only costs $16,000.
9. Get a home energy audit. The price of these has come down. For a few hundred dollars, experts using high-tech gadgetry, infrared scanners and computer models will analyze your home, work out in detail all the ways it's wasting energy and tell you what you can do to stop it. As the average home uses about $2,400 worth of energy per year, the payback is often impressive. Matt Golden, chief executive of San Francisco-based specialists Recurve, says he often finds he can cut bills by 20% to 40% just by eliminating waste. An audit can also help you rethink your heating and water systems, and identify possible sources of renewable energy, from solar paneling to a geothermal heat pump, that can help the environment and may save you money over time. Check for firms accredited by the trade body, the Building Performance Institute.
10. Buy an e-book reader. If you read a lot, they are very green. Traditional books, newspapers and magazines aren't: They do a lot of environmental damage, from cutting down trees to manufacturing and distribution. Emma Ritch, senior research analyst at the CleanTech Group, an environmental consulting firm, has done the numbers. Bottom line: A device like the Kindle has about the same impact on the environment as 23 books, or 280 newspapers, or 177 magazines, or some mixture thereof. So if you're going to use it to read more than that, you're helping the environment. By my reckoning, someone who buys a newspaper a day, a magazine a week and three books a month will break even by the fifth month.

Debt, Savings, Retirement: Where Should Your Money Go?

Should you pay down your debt, put money aside for emergencies or save for your retirement? The answer is that there is no answer; there is no magical one-size-fits-all formula because each situation is different and you need to take your career, lifestyle and age into account.
If you are in a secure job in a steady industry, you may not have to worry about your income, but if you are self-employed, you may(rightfully) be more nervous about setting aside short-term savings. If you live in an expensive city, you will pay more for life than someone earning the same salary in a cheaper city, which also means you will have less money to put toward your debt. If you are young and single, you can take more risks with your money because time is on your side and you can make up for mistakes in the future. However, if you are nearing retirement or you have a growing family to feed and a mortgage to pay, what you decide to do with your money has a larger ripple effect with a shorter time frame to fix it in.
So what to do?
1. Take Stock of What You Have
DebtWhile taking the above into consideration, you need to have some hard numbers to use as your money goals. Look at your fixed and variable expenses, and see what's leftover to put toward savings and debt. Add up all of your debts and list the minimum payment for all your debts.
Now add an additional 20% on top of your debt minimums, which will go toward your principal, and consider that to be your minimum debt repayment to start.
For example, say your minimum payment is $500 a month. Twenty percent on $500 is $100, so you should now pay $600 a month.
The amount credit card companies calculate as your minimum goes mainly to paying the interest on your debt, and barely covers the principal. This means that in many cases, it will take you 10 to 20 years on average to clear your debt, not to mention the final amount you will end up paying in interest costs.

RetirementCalculate how much you think you might need in retirement and for how many years you'll need it for. The general rule of thumb says you will need approximately 75% of your current income for each year you are retired.
EmergenciesCalculate six months' worth of bare bones living expenses as your emergency fund, which includes rent, groceries, utilities, transportation and 10% on your income for miscellaneous expenses. If you are self-employed, you should save up to a year of expenses to offset risk.
2. Come Up With a PlanTo start, you should aim to clear your debt in five years, save $100 for retirement and $100 in your emergency fund per month, adjusting as you see fit.
If you are young, time is on your side, and focusing more on debt with minimal emergency savings is a good strategy because you should be able to make up for your retirement savings later.
If you are nearing retirement (within 10 to 20 years), you should focus on clearing your debt until it's gone while saving at least three months' worth of emergency expenses. Next, start putting those savings toward retirement. It's important to start with your emergency fund rather than the other way around because it is too risky to have your savings locked in for the long term without any cushion for the short term.
After you've accomplished one of your goals (debt repayment or savings), continue to set aside money for your other goals.
3. Continually Reassess Your Needs and WantsIt may seem impossible, but you can always cut back somewhere, it's just a question of what you are willing to try.
Think of it this way: If you make an effort to trim the fat, it means you will get out of debt faster, save money quicker and be financially secure sooner than you had originally projected. For quick results to your bottom line, cut back your cable TV and cell phone plans and shop around for lower insurance quotes.
Final TipsTo accelerate your plan for financial freedom, snowball your windfalls: if you get a bonus or a tax refund, put it all toward your debt or into savings. Don't spend your emergency savings unless it's a real and unplanned emergency. Finally, keep saving even after your debt is done: putting at least 10% of your net income into savings for the rest of your life will help set you up to be financially secure.
Stay vigilant and don't lapse back into your old spending behaviors and don't be discouraged if things don't go as planned - it isn't a race, it's a journey.

10 Key Steps to Getting Ready For Wealth

1. Why Do It At All?
Find your motivation. No-one will ever care as much about your financial well being as you do. Just think about how it would feel to work because you want to, making confident financial decisions, never having to answer to anyone again? Listen to the news knowing that you are unlikely to be affected by redundancy, be able to make life choices based on other criteria than just money. Feel strong and supported with a financial cushion behind you. Give back to your community in some way or work in the third world. In the words of the bank, there is another way and you can create it.
ACTION STEP:
Write down how you would like to be living your life, on a Tuesday in two years time and another Tuesday in ten years time. Write down where you are, who you are with, what you are doing from the moment you get up to the moment you go to bed. If you carry on as you are, are you likely to be able to live that life? No? Is this compelling enough yet? If not, go back and make it more so.
WARNING: This is the first hurdle that most people fall at. If you think that this step is pie in the sky and can be bypassed, be warned. If you can't be bothered to do this properly, you will probably never be able to create financial abundance for yourself - successful people take the time to create powerful visions for themselves. It makes the goal setting so much more fun and takes away the need for "self-discipline".
2: Discover the 4 Lanes of The Wealth Highway
The greatest relief of all is that there are only four ways to create real, lasting, sustainable wealth. I'll be going into the four lanes of the wealth highway in more detail in later articles but, for the moment, think to yourself, Phew! that's not too overwhelming - I can learn about just four things! Those four lanes are Property Investment, the Stockmarket, Minding Your Own Business and Profiting From Your Passion. Each has a myriad of vehicles to ride in - perhaps a pushbike will suit you better than a juggernaught initially. Perhaps you will want more than one vehicle in each lane!
ACTION STEP:
Decide if you are a pushbike person or a Ferrari person. Both will get you there but one will be faster. Think about which lane of the motorway you are going to drive down first - and no, you don't have to get a vehicle on all of them to start with, but if you can be aware that the more vehicles you have on each lane, the faster you will get to your destination.
3: Give up Self Discipline for Simplicity
I mentioned self-discipline briefly earlier. I don't actually believe in self-discipline. I believe in creating a compelling vision, setting chunked-down goals and timelines, setting things up so that they are as easy to achieve as possible and designing environments and support systems to ensure your success.
We have talked a bit about the compelling vision and the second part of the puzzle is simplicity. The secret to financial success is KISS (keep it simple, stupid!). I have tried every accounting package under the sun (Microsoft Money worked for a while) but they are all just too complicated. You don't need all that stuff! A simple Excel spreadsheet that tracks your bank account and feeds into a 12 month cashflow forecast will do the job nicely.
ACTION STEP: Learn how to use Excel fast. Nothing fancy, just a few simple basics.
4: Pull It All Together
The oil that lubricates your vehicles is information. How can you make good decisions if you don't have all the information you need at your fingertips? Here is where we gather everything you will need into one place. Don't worry! You don't have to do anything with it just yet.
ACTION STEPS:
First of all, The Equipment. You will need a ring binder or two, some coloured file dividers (minimum of 5), plastic wallets to keep small items and loose sheets in, a hole punch and a stapler. Three pens, black, red and blue or green. Gather everything together first, because if you need to get up from your seat for anything, you will get distracted by the kettle, the washing, the cat, and you will lose the momentum.
Next, gather The Information. Recent bank statements, credit card statements, wage slips or sales invoices (if you are self employed). Tax stuff, put it in a separate pile. File the bank statements at the front section, in date order, oldest at the back. Credit card statements similarly. Next the "money in" section, wage slips or invoices. Then the "money out" section.
Receipts or invoices for things you buy. How much you divide each section up is entirely up to you - again, keep it simple to start with. Get a printout from the bank of all current direct
debits or standing orders.
5: Can I Have A Receipt Please?
Receipts fill in the knowledge gaps between your bank and credit card statements - especially if you make a lot of cash withdrawals. Try to get into the habit of paying by switch - it lists the shop name on your bank statement and helps you figure out what you spent where (unless you are trying to stick to a budget by taking out a fixed amount of cash per week and living on that!).
ACTION STEPS:
Get into the habit of asking for a receipt for every purchase you make. It's easier to ask for a receipt every time, than trying to remember what you need receipts for (or not). Tuck them
immediately inside your purse, an envelope in your bag, or a plastic wallet in your filofax. Once a week, empty them out into one of the plastic wallets in your lever arch file. Label the wallet "Receipts - w/e 31/12/03".
6: I'll Just Get The File Out
Mark Forster, best selling author on Time Management, says that when you tend to procrastinateabout doing essential tasks, the best thing to say to yourself is "I'll just get the file out". I will go one further step back here, and ask you to think to yourself, "when, each week, is the best time for me to just get the file out"? Unless you schedule some regular time to look at your finances, you will never get round to it, the receipts will pile up and it will swiftly become a psychologically insurmountable task.
ACTION STEPS:
Start slowly Don't expect to be able to change the habits of a lifetime overnight. If you can just get into the habit of collecting the information you need and keeping it tidy, you have all the tools at your fingertips for when you are ready to move to the next stage. Well done! Make Time If you schedule some time each week, you should be able to do everything required to become a financial whiz kid in about 2 hours maximum. Sunday or Monday mornings are good, so are Monday evenings. Perhaps you want to take a day off to get started? Or use that dead week between Christmas and New Year. So when ARE you going to "just get the file out"? Get support You could talk to your partner, spouse, etc. and tell them how you want to get a
handle on your money, and tell them the time you have set aside to do it. Ask for their support, by not distracting you or tempting you with offers of "more exciting" things to do. I promise, as your financial intelligence increases, as you take more action, as your wealth creation gathers pace, this will swiftly become one of those "more exciting" things - that allows you to do even more "more exciting" things.
7: Saving v Investing
I never understood the point of saving. What did you save for? Things you were going to buy later. Why not have them now then? I didn't understand the difference between saving and investing. And the interest rates were so pathetic what was the point? I totally didn't get the power of compounding. Nobody told me that what counted was not what you earned but what you kept. Nobody said that the reason wealthy people are wealthy is because they are taught to put an extra step in between "earning" and "spending". That extra step is investing. Investing in assets that produce income themselves.
Then about three years ago I saw a drawing that changed my life. Here it is. The blue line is your income, the red your outgoings, the black arrow being the difference between the two (what you keep) and the green line the interest your savings can earn you taking into account the power of compounding. When the green line crosses the red line - you are financially free. Blew my mind.
ACTION STEPS:
Visit http://viralurl.com/moneygym/richdad and watch a short fun animated flash movie that explains these concepts in more detail. Brought to you by Robert Kiyosaki, author of "Rich Dad, Poor Dad" the greatest book on financial intelligence on the planet. Brace yourself for the strong American accent, by the way. Then buy that book and read it from cover to cover.
8: Take Your Financial Driving Test
You wouldn't expect to get in a car, never having driven before, blindfolded, no seatbelt, hanging your legs out of the window, drinking champagne, driving the wrong way up the motorway in the wrong lane and not end up in a car crash, would you? Well, so many people take their first excursion into wealth creation with no skills, no training, no advice, no mentor or coach, no wonder they come a cropper!
How many folk do you know, who buy a share on the stockmarket based on a hot tip from a bloke in the pub, then wonder why they end up losing money. How many people leave their job and start a business doing something they loved to do as a hobby, then wonder why they end up as one of the 85% whose business fails in the first year? How may people invest in "buy to let" then wonder why their "hot property" sits empty or worse, ends up being "squatted" by a bad tenant?
ACTION STEPS:
Decide which lane of the wealth motorway you are going to tackle first. Get a book, take some training, find a mentor - get started - by all means as quickly and inexpensively as possible, but get help! I recently went on a property investment course that cost £1880. Expensive? I learnt two things that made me a minimum of £40,000. Starting to look cheap now! You CAN learn this stuff and you should be ready to invest in training in the same way you paid for your driving lessons. And if you are finding yourself resisting that idea, think about the hot tips from the
bloke in the pub. How good is "free advice" really? Usually the reason it's free is because it's worthless!
9: Create A Wealth Team
But there are people worth listening to. Find a great bank manager - usually a business bank manager rather than a personal manager. Imagine how many businesses they see per week - they see the good and the bad, the ones who are successful despite themselves and the ones that fail even thought the idea is good. A good accountant can help you set things up well for you before you even start.
A great solicitor will help you avoid legal problems you may not even know about. I have two or three wealth "buddies" - people who are more successful than I am and who love to talk about what they are up to. Inspirational, knowledgeable, supportive, aspirational, and they love to share what they know. In the same way, avoid people who are negative about everything or who are "energy vampires". They will come out of the woodwork as you become more interested in wealth creation and finance and it always amazes me how much energy they will put into trying
to discredit what you are learning about or trying to do, rather than improving their own lives!
ACTION STEPS:
Make a list of all of the people you spend significant amounts of time with. Work colleagues, friends, family and anyone else you may network with. Put a tick next to their name if they are positive, supportive and successful in their own right. Use your own definition of success here. Start to identify who could be in your Wealth Team and begin to ask some searching questions. If you want to get involved in Property Investment for example, then ask everyone you meet (and particularly everyone you are thinking of including in your Wealth Team) these kind of
questions. Are you a Property Investor? How many properties do you have? What is your
investment strategy (or plan)? If you are interested in starting your own business, ask they if they have any other businesses on the side, what they are, what the plan is for that business? If they answer in the negative, go and find people who are involved and already active in what you want to do. Surround yourself in action orientated people. Why would they talk to you and tell you their business? Because successful people have an abundance mentality, they love to share what they know, and learn from other people. For all they know, you may be able to teach them something new! And you will, one day.
10: No Magic Wands
So sorry there are no magic wands. Sorry that you will have to take action. Sorry that there are no knights in shining armour. But remember, doing something 30 times makes it a habit. If you just ask for a receipt 30 times it will become second nature. If you just get the file out 30 times, you will be in the habit of sitting down to spend some time on your money. Don't give up if it seems overwhelming, get help.
ACTION STEPS:
Make it fun - play games with things like debt busting! Draw a grid for each debt with a square for every repayment you will make on each debt and colour each square in every time a standing order goes off. Get the Cashflow 101 (see http://viralurl.com/moneygym/richdad ) and practice wealth creation on a boardgame first! The more fun this is, the more likely you are to take action. Find a buddy who is into this wealth creation mularky as much as you are, and get your partner/spouse on your side and excited about the possibilities of financial freedom for them too. Find a mentor or get a coach, one who actually does the things you aspire to do. But whatever you do, do something!
I know you can.

3 Best Stock Market Games

Stock market games help beginners become better traders. Here are some of the best available stock market games.
Paper Trade Your Way to Investing Success
The best stock market games for beginners are those that most realistically reflect actual trading in the stock market. Stock market games are nothing new. Most beginning investors do a little "paper trading" before committing real money to the stock market. However, the results of paper trading can vary wildly, and are therefore only effective if the stock trading simulation is done under strict controls.
It is a myth that only beginning stock investors play games and paper trade. With the help of sophisticated software, even some of the most seasoned traders test new trading systems before committing real dollars to them. It only makes sense to test a theory in real-world circumstances to see if it will be effective.
Some of the best stock market games for beginners are made even better by the fact that they are free. Providing real-time quotes and executions on trades, these simulators remove the human element from the simulation. When paper trading, humans will naturally give themselves the benefit of the doubt when it comes to trading, often convincing themselves that they purchased at the low of the day and sold at the high of the day. On-line trading games provide more accurate results, perhaps lowering anticipated returns but providing invaluable feedback in the form of a realistic simulation.
Top 3 Best On-line Stock Market Games
stock-market-graphic
One of the most popular stock market games is Wall Street Survivor. In addition to being a realistic trading platform, Wall Street Survivor offers the additional benefit of a real cash prize to the best traders every month. Competing against other traders makes learning the stock market faster and more fun.
Another excellent paper trading platform is the Investopedia Stock Simulator. It offers the trading platform, plus volumes of educational information on investing techniques and terminologies. In addition to the simulator, there is an Investopedia Stock Simulator Blog to keep you up to date on the system.
Finally, another very popular stock simulator is Fantasy Stock Market. FSM offers league play as well as individual trading, so it is a good way to test out investment club strategies and to compete with and against friends and family. The top traders are listed on the home page every month, and the most active stocks traded are listed separately.
On-Line Futures Trading Game Too
It bears mentioning that there are also games and simulations available to those wanting to learn to trade stock index futures. Futures entail a great deal more risk than stock trading, but the increased leverage can mean much higher returns.
A good place to start is at Mock Trading. This is a paper trading simulator for futures. Beginning investors will find stock index futures there, as well as dozens of other commodities. Paper trading is especially important in the futures market because the market can move against an investor very quickly and decimate his entire portfolio.

It is important to know when to stop paper trading. Once you've earned consistent gains in a stock simulator, it is time to commit your money. It doesn't do you any good to be up 1,000% in a fake account. Once you are comfortable trading for fun, it's time to get into the market and make some real money!

Asset vs Liability

Asset vs liability is the first theory you need to understand in order to have a stable financial future. Not understanding the difference between these two ideas is the single most significant reason the middle class can never quit working and become wealthy.

We all start off with a poor understanding of money. Each time you find money in your hands, you make decisions on how to spend that money.

The quality of these decisions depend on your understanding of money. These choices determine whether you will be rich, poor, or middle class. It is only through persistent effort that your knowledge and understanding can be increased.

A liability is something that takes money out of your pocket every month, whether you made money or not. A couple good examples of these are your house and car. Unless you have a rental property or a taxi service chances are you have some sort of payment due every month on these expenses, regardless if you worked or not.

There is no such thing as job security in today's global market. Every time you add another liability you are committing to an expense that does not bring you any income in return. If you lose your job chances are your liabilities are going to become problematic to pay, to say the least.

Those that are financially literate understand that an asset is something that puts money into your pocket each month, regardless if you work or not. To understand an asset you must first understand passive income and how it relates to your current cash flow.

When you have an asset that produces passive income you are receiving your profits from your investment regardless if you do anything to maintain it. Rental property is a great example of this. If your landlord decided to take the next week off you still are going to have to pay them rent in full.

Here are a couple more examples of passive income.

* Bank Interest

* Dividends

* Rental Property

* Appreciation

* Royalties from inventions, music, movies, software, games, books

* Entrepreneurs get profits from managed businesses

* Insurance, Network marketers, and Securities agents get residual (passive) income from past sales


It is important to understand there are times when a asset becomes a liability and vice versa. The house you live in is a liability until the point that you sell it and make money on the appreciation. Up until then you have a mortgage. If you were to rent the same house out for enough to pay your mortgage and make a little profit you now have the same house acting as an asset.

With these theories in mind we can now resolve many of the problems in the cash flow patterns of the poor and middle class.

Lesson One From Rich Dad, Poor Dad Have Money Work for You

“The main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money. . . but never learn to have money work for them.” Robert Kiyosaki

The #1 New York Times Bestseller “Rich Dad, Poor Dad” is a story about the money lessons that Robert Kiyosaki learned from his two dads, his biological father, who was his poor dad, and his best friend’s father, who was his rich dad. Poor dad was a Ph.D. and held a very important government position, but he never had enough money at the end of the month and he died broke. Rich dad dropped out of school at the age of 13 and went on to become one of the wealthiest men in Hawaii.

“Rich Dad, Poor Dad” is a must-read for anyone looking to develop a rich person’s financial programming and mindset. The first important lesson this book teaches is the following: Don’t work hard for money; instead, have money work hard for you.

Kiyosaki explains in his book that there are three types of income:

• Earned income

• Passive income

• Portfolio income

Poor dad taught his son Robert to go to school, study hard, and get good grades so that he could find a secure job that would pay him a good salary and give him excellent benefits. That is, he advised him to work for earned income, or to work for money. However, there are several problems with this strategy. First, income streams from a salary are linear: you only get paid once for your effort. If you stop showing up for work, you stop getting a paycheck. It’s like being on a treadmill. Second, earned income is confined to the amount of time that you work, and time is a limited resource. Therefore, there’s a limit to how much earned income you can make. And third, earned income pays the most taxes.

Passive income is income that does not require your direct involvement. You make a strong initial effort to get this type of income started, but then you do minimal work thereafter to keep it going. It can be income derived from royalties–for example, you write a book–, from patents–you invent something–, income derived from real estate, and so on. Brian Lee at geniustypes.com swears by bulk candy vending machines to create passive income. There are many ways to create passive income and the key is to be on the look-out for passive income producing opportunities.

Portfolio income is generally derived from paper assets such as stocks, bonds and mutual funds. Bill Gates is one of the four richest men in the world because of portfolio income, not earned income. That is, he’s rich because of the stock that he owns, not because of the salary he earns. One of the many benefits of portfolio income is that paper assets are easier to maintain than other types of assets.

Another way to think of passive and portfolio income is as residual income.

With residual income you work hard once, and it unleashes a steady flow of income for months or even years. You get paid over and over again for the same effort. That is, you get paid multiple times for every hour of work and the stream of income continues to flow whether you’re there or not. Therefore, you can spend your time doing things other than working for money. In addition, how much money you make is not determined by how many hours you work, but by how many residual streams of income you create.

Rich dad would say to Robert: “The key to becoming wealthy is the ability to convert earned income into passive income and/or portfolio income as quickly as possible.” Start looking for opportunities to create passive and portfolio income and develop a disciplined, well-planned strategy for your money.