Posts Tagged ‘ Consumer Finance ’

Sometimes really smart people do things which, well, aren’t so smart. Here are a few common examples of how some people throw away money.

Fund your 401(k) - at least as much as is matched by your employer
If your boss offered you a $3,000 raise, what would you do? Turn it down? Say “no thanks”? If you’re not taking advantage of your firm’s 401(k) matching program, that’s exactly what you’re doing.

Many corporations that offer 401(k) plans will match employee contributions up to a certain level. This is free money!!!! Granted, you don’t have access to your money until retirement age without paying a penalty, but still – It’s free money!

As an example, let’s say your salary is $50,000 a year and your employer matches your 401(k) contribution up to 3% of your salary. That means if you invest 3% or your salary, or $1,500, in your 401(k), your employer will also contribute $1,500 – Free money!

If ever there was a good reason for living below your means, this is it. Cut down on your expenses so that you can contribute the maximum amount matched to your 401(k). Hopefully, you can fund your 401(k) even more, to the maximum amount allowed by law. But put in at least as much money as your employer will match. After all, you wouldn’t turn down a raise, would you?

Having created a list of charities to support, it’s time to start contributing. A few things to consider:

Timing your contributions – consider July
Our family likes to make charitable contributions in the summer for two reasons. One, the deluge of December donation requests all go into the recycling bin. We’ve already made our contributions for the year, so don’t consider new requests.

Secondly, it’s easier on our cash flow. Like many people, we fund our 401(k) in the first quarter, pay taxes in April, then start buying for Christmas in the fall. We make our contributions in July to smooth out our monthly cash flows. 

How you contribute – check or credit card
Charities strongly prefer that you contribute by check because it saves them the 3% credit card processing fee - money which could have been spent on their programs. On the other hand, you may get frequent flyer miles for charging your donation on a credit card. Just something to consider.

Make a long-term commitment
Your selected charities want to count on your dollars coming in for a long time. Stick with your charities year-in and year-out unless they no longer meet your carefully thought out charitable goals or ideal not-for-profit characteristics.

Be consistent in your giving
When charities draw up their budgets they’re planning on you giving at least the same amount you gave the year before. Try to keep your contributions at the same level, or increase them, over time.

Say no to charities not on your list
When you’re approached by co-workers, family, or friends to give to their favorite charities, if their pet causes don’t squarely meet your criteria, just say no. Explain how you’ve decided on the charities you support. Or make a small contribution ($10 or $25) to keep the peace.

Ask to be removed from mailing lists
Finally, ask those charities you don’t give to, which repeatedly send you mailings, to take you off their mailing lists. You’ll save them money while cutting down on your junk mail.

By being more strategic in your charitable giving, you can get “more bang for the buck” with your contributions. Start by determining your charitable goals, then specific criteria to select charities to support. 

What impact do you want to have?
Write down the issues you’d like your charitable giving to impact – these are your ‘charitable goals’. For example, you might want to:
- Combat poverty
- Improve women’s status around the world by educating girls
- Support your own children’s education
- Give to your local food bank

Deciding on the type of charities to support
There are many ways to affect change - some more direct than others. To combat poverty you could support advocacy groups which aim to change laws and policies, agencies which give direct aid to individuals, job training programs, etc.  Give some thought to the types of charities you’d like to support.

Write down the characteristics of your ideal charity
Just as there are huge differences among colleges or companies, not-for-profits also vary widely. Ideally, what characteristics would you like a not-for-profit you support to have? Here are some of the qualifications I require of any organization I give money to: 
- Gives me information on how my dollars are being spent
- Has clearly articulated projects and goals
- Doesn’t require much money from me to make a difference
- Doesn’t call or send me endless direct mail solicitations asking for money

If your community has bottle and can return machines, you probably do this on a regular basis already. For those of us who don’t have access to all the usual American conveniences (like myself and my fellow New Yorkers), it’s a real pain to return bottles and cans. Other than ‘can gatherers’ who return hundreds of cans and bottles at a time to make money, I don’t think I’ve ever seen anyone returning cans and bottles.

Well, that’s changed now. Our household decided to quit throwing away money. We now return our bottles and cans. We may only get a $1.00 or so back, but money shouldn’t be thrown away. 

At first it seemed somehow humiliating – like I was scrounging for money. Now I wonder why everyone doesn’t do it. Why isn’t everyone recycling and ‘getting paid’ to do it. And it’s a great lesson for our daughter (who usually gets to keep the deposit money) – that a little effort pays off.

Photo credit: 1

All too often we return something for store credit, then forget all about it. Or we get a gift card and never get around to using it.

Treat your credits and gift certificates like money – because they are! Use them to pick up something on super-sale, or something a bit extravagant that you’ve wanted for a while.

If the store doesn’t have anything you like, you can regift a gift cards to someone else. Or use this “found money” to buy a gift someone will like, or to buy a ‘generic’ type of gift that you can have on hand to give to someone later.

Whatever you do – use your store credits, gift cards, and gift certificates! Don’t let them expire, lose them, or find out too late that the store has closed. You’ll kick yourself for throwing away money.

Photo Credit: 1