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Control Urges With a Partner

Posted in Save money on July 6th, 2010

Wahid Hussaini

By Wahid Hussaini

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Given two individuals: Al Dente and Summer Greene. Al and Summer have been friends since university and live about a five minute walk from each other. They both have full time jobs that allow them to live a relatively comfortable life, able to pay for basic necessities such as rent, groceries, transport, and an occasional night on the town.

Needing a Holiday

Al and Summer have both been thinking about vacation. Al wants to spend two weeks in Japan, while Summer would rather spend those two weeks in Iceland. Although they can’t seem to agree where to go for a holiday, they do agree that it would be a lot more fun if they got to go together. So they decided it would be best to start saving up for the holiday regardless of where they are going, and they would decide on a location later.

Control Urges

But if they are going to start saving, they are going to need a little help to control themselves. Summer knows that Al Dente’s weakness is food, if he could he would probably go out to eat every night. Al on the other hand knows that Summer’s weakness is clothes. Summer would have no problem spending a whole weeks’ worth of money on a full day of shopping for shoes, tops and little dresses.

Because of both of their weaknesses, they decided they would have to persuade each other into not spending as much as they usually do. Summer would have to persuade Al to pack his lunches and limit himself from eating out every night. Al would need to go shopping with Summer so she does not buy the whole store on impulse.

This little story does have its purpose. It is to show that it is ok to ask others for help in limiting yourself to spending so much money. Think of it as going to the gym. you are so much more likely to succeed in achieving your desired body if you have someone to work out with. The same goes with your finances as well. It is always good to have that support with you along the way to your goals (holiday in this example).

Propel Persuade Prevail

Know your weakness and ask your friend, spouse, or whoever to always give you that extra motivation. And it is always good to find that someone who will exercise good spending habits with you.

Al did not want to go to Summer’s Iceland and Summer did not want to go to Al’s Japan, so they decided to compromise. After about three months of packing lunches, making dinner at home, and avoiding those extra pair of boots, Al and Summer decided to spend their holiday in Italy where Summer will indulge in great food and Al will enjoy the lovely weather.

So go out there and find yourself an Al or a Summer who will push you towards funding for your goals.  This is not to say to avoid splurging friends (I have friends who are not afraid of blowing all their money on alcohol), but maybe you can come with a little compromise as a start.

Do you surround yourself with people who are more likely to splurge on food, clothes and entertainment, or does your circle of friends consist of people who live a more frugal lifestyle?

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I Can’t Afford to Buy Cheap Stuff

Posted in Save money on June 30th, 2010

Wahid Hussaini

By Wahid Hussaini

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What I mean by this of course is that if you buy cheap goods that will last a fraction of its meant-to-be life span, then you are basically throwing money into the rubbish bin. If you find yourself replacing a certain item in your closet way too many times, then perhaps it is of too low quality. Replacing low quality items can eventually be much more expensive then buying an item of steeper price that will last a much more significant amount of time.

Shoe in Quality

Let us take a pair of shoes for example. If you decide that you need a pair, and go with the shoes that look presentable but seem that they would break apart in your hands because they were practically made in someone’s backyard, then you will find yourself buying another pair soon afterwards. It also adds to the stress of going out to the shoe or department store to buy shoes again, wasting not only your money, but your time as well.

If however, you decided to go with the more expensive shoes that are of stupendous fabrication, you will probably have it for years to come. Shoes of better quality can be maintained for a much longer time and it is easier for shoe repairers to go about making any adjustments or fixes when needed. So for a low maintenance fee, you won’t have to replace your more expensive shoes for perhaps years to come. You will find those shoes to have been a great investment, and actually has saved you money on the long run as opposed to the cheaper shoes.

Initial Cost versus Operating Cost

This goes with anything. When buying appliances, you must look into how much the initial cost is, how long it is expected to last, and how much the operating and maintenance costs will be. An incandescent light bulb costing $2.00 that takes in 100W of power will end up costing more than a fluorescent 13W light bulb that costs three times more ($6.00). This kind of budgeting is important for everything, from clothes, to headphones, to washing machines.

With the environment on more people’s minds now, it is important to buy appliances that have a low operating power input requirement. A washing machine or dishwasher that uses less water and energy will end up saving you money as well as a lower carbon footprint on the environment. A refrigerator that uses less power will also end up saving you money on electrical costs. Weigh out all costs and benefits, the initial cost as well as the operating and maintenance costs.

When it comes to clothes or shoes that you’re investing a lot of money for, it would probably be best to get a classy look and not so trendy, otherwise you’ll be wearing something that has been lasting very long and went out of style years ago.

Have you ever sacrificed quality to save money? And have you ever consciously bought a more expensive item based on quality?

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Frugality versus Cheapness

Posted in Budget, Save money on June 29th, 2010

Wahid Hussaini

By Wahid Hussaini

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Countless “Save-Money” tips

So you want to come up with a plan for saving money. There is a limitless amount of ways of which you can save money, and we could probably sit here and talk about it for ages. We could tell you to not buy that cup of coffee in the morning, stay away from the bagel shop and from that cafe in the evening. We could tell you to eliminate cable or satellite and cancel your gym membership.

We could tell you to make an account on trade me to sell your TV, stereo and iPod, as well as half of your wardrobe. And persuade you that you actually only need three pairs of shoes (dress, sneakers, casual). But what is the fun in all that?

Don’t Make it a Chore

Saving money does not have to be such a chore, all one needs are a few adjustments in the way one spends his or her money. For me personally, if I had to avoid that cup of tea in the morning I would get fed up and forget about my expenses and spend like I had compulsive shopping disorder.

Talk about being dramatic, but what I mean is that frugality is key when it comes to saving money and dissolving deeper debt. It’s all about how you buy your goods, not so much avoiding it all together.

Value of Life

I don’t mean to be all philosophical here, but what would be the point of living if you can’t even enjoy the small things in life? Think of it this way, half the joy of buying something is actually buying (paying for) the item, rather than using it.  Meaning that when you do go buy that cup of coffee in the morning or an evening snack, you will get about a good amount of euphoria worth more than the $4 you spent.

This euphoria will last not much shorter than when buying a new TV. This is because people tend to get used to what they have, hence never being satisfied with their current lifestyle and always wanting more. So a new TV will only give you a thrill for a very temporary amount of time.

Affecting People Around You

Being frugal is not so much trying to avoid buying everything at all costs. On the contrary, being frugal means you understand the value of what you buy, and you weight the cost and benefit. Being cheap on the other hand means you are only looking for the lowest price. A cheap person might be negligent of tax when paying someone back, or forget about a tip.  A frugal person would avoid buying a drink so that she can stay on her budget.

Most importantly, cheap people think of the now, how much they could save at this instant. Frugal people think long term, they have a plan and purpose, and they put it into conscience action. Cheap people might affect the friends and family around them, doing anything they can to try to save money. A frugal person is conscience of their personal expenses, and whether or not buying a specific item is worth their money.

Would you be able to tell the difference between a frugal person and a cheap person? Have you met people that have been a bit of an annoyance because of being cheap? And have you learned anything from a frugal person?

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Entertaining Student Life

Posted in Save money, Students on June 25th, 2010

Wahid Hussaini

By Wahid Hussaini

3 Comments

Besides the usual cost of going to school which includes courses, books, school supplies and student loans, people tend to not include the cost of entertainment when talking about budgets for students. Due to this dis-inclusion, students do not plan their budget accordingly and it seems as if money is disappearing from their pockets.

Why isn’t entertainment normally included? Call it stereotyping, but students do spend quite a lot of money on some form of entertainment. After all, your college years are supposedly one of the best years of one’s life, if not the best. Planning how much you choose to spend on entertainment can actually help you save quite a lot of money. This way you are not as likely to go splurge on something on impulse.

Sacrifice a little bit

One thing to do would be to prioritise your spending. What is more important to you, entertainment, food, clothes or books? If you are anything like me you would probably say books, but that of course depends on the individual. How much are you willing to sacrifice one item so that you may spend more on the other? For myself, it was quite difficult to limit spending on clothes when I started university. Everyone I’m sure has their weak spot, and for me it was trying not to upgrade my wardrobe very often.

So what you have to do is limit yourself to how much you can spend on that particular category. If you are the type who loves going out to movies, think about how much you are willing to limit yourself every month. Maybe you are able to replace going to the theatre one night with renting a DVD and enjoying it at home with your friends. It will  probably end up being even more fun because you can be louder than in the theatre, eat whatever you want, and just be yourselves. Not to mention that you will probably feel better about yourselves since you were able to achieve this night without wasting your pingas. Not only have you saved money from theatre tickets, but on food as well.

The video is of Kyle who talks about how heaps! has helped him save money by telling him where he spends his money (like alcohol) and being able to avoid over-splurging.

Although this post is not like many other posts which concentrate on how to split your budget for education, books, and how to deal with loans, I personally find that talking about entertainment for students is nearly as important. The reality is that students are not very likely to give up any kind of social life. So why must we always assume that students will be able to split their budget while not including the vast cost of enjoying themselves?

Books, Parties, Alcohol

I don’t mean to stereotype, because I am sure there are students who are more responsible with how they spend their money, as they won’t have the same urge to splurge. But for the majority, it is no doubt the case. Sometimes when you think of being a university student, you think of parties, going out to bars and theatres and buying lots of alcohol.

Which then leads me to my next point. The cost of alcohol can be quite hefty on the wallet. I have not started drinking until relatively recently, and I have found that I spend more on drinks in one night, than I spend on food for a week. Being careful of how you spend your money on alcohol is crucial to budgeting, this is important to everyone, not just students.  Although it is probably more fun to go out to bars with all your friends, it is no doubt more economically reasonable to buy beer or wine in bulk at your local supermarket and spend the night indoors.

Not Too Many Discounts

Another thing to be wary about are student discounts. Although it seems that going out specifically because you receive discounts in drinks and dining out due to you being a student, it will probably only hurt you in your wallet. How is this possible? Well when  you go out in search of deals that you would not necessarily buy otherwise, then you are actually giving your money away rather than saving. For example: if you find that there is a bar that is giving 2 for 1 drinks on a Wednesday night ‘student night’, then you are wasting money on something that you never really planned for in the first place. So only if you are looking for something specifically, without knowledge of what specials there are out there, should you be in search of places that actually do give discounts.

A little confusing perhaps, I realise, but let me reiterate. If you are someone who does not necessarily eat out Thursday nights, and you happen to come across a restaurant that has a $3 discount for students, you will probably be prone to go into that restaurant because it seems as if you would save money. The reality is that you are wasting money because you probably eat at home on a Thursday night, not out.

On the contrary, if you and your friends want to go out anyway, and have a plan to dine out or go to a bar (I want to emphasise plan), then it would be wise to do a little research on discounts at various places.

I promise to stop rambling.  If you came this far in reading I thank you so much. I hope you also took the time in watching the video we have on this post as it is of a real student, who talks about how he budgets his money on heaps! and how it helps him save money.

Let us know if you have good ideas on how to have a little fun while saving money. Do you plan on your nights out and getaways or is it almost always spontaneous?

Cheers,

-the heaps! team

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Show off Your Budget

Posted in Budget, How to, Our customers, Save money on June 24th, 2010

shobita@heaps.co.nz

By shobita@heaps.co.nz

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Fun Budgeting

How many of you have seen countless tips on how to budget? I don’t know about everyone else, but every time I think about budgeting or tracking expenses, I get bored. Why does budgeting have to be so tedious and time-consuming?

Maybe if we make budgeting a little more fun, as hard as it may be, people will actually start to save money instead of just talking about it. Honestly, how many times have you said to yourself that you would start saving more money tomorrow, next week, in the following month? And how many times have you sat yourself down and planned a budget and started to track your expenses only to find yourself abandoning it three weeks later?

Listen to Others

For me, I particularly like listening to other people’s financial stories as it helps me with my budget. And when I listen to others, it motivates me to get my act into gear. Setting a goal especially helps me save money because then I actually have a good incentive to keep on top of my money.

A lot of people tend to follow in others footsteps. Which is why it is indeed a good idea listening to how others budget. Similar to how people talk about how awesome their new expensive shiny car is, and you have the strongest urge to go out there and buy an even bigger and more expensive car. Why can’t budgeting be like that? You should go out there and show off how much you are saving just by knowing where your money is going.

So we at heaps! decided that we would talk to some people about how they feel about budgeting and tracking their expenses. We hope you enjoy the video and that you are more motivated to be aware of where your money is going and to really understand your finances. Maybe it will provide a little boost to budget, and help you save. After all, that is what we are here for.

Personal Finance in Social Media

Yes it may sound odd, but it’s only for a good cause. Think of it as a Facebook, Twitter or Youtube for budgeting. It should be a very social thing. With everything pushed very quickly because of the internet, and communication being more convenient than ever, budgeting and tracking expenses should be pushed out there just like all the social media channels.

I really don’t think promoting budgeting out into the social world is very strange. Just think of it, if saving money was so much talked about, then you would start being motivated to do the same. So instead of wanting to beat your neighbours in how brand new your new phone is, how about showing off how stable your checking account is. And how your savings account is only growing.

The more mature generations should breed a new generation of youngsters who want to save. Considering the amount of debt we are all in, and debt being continuously spread (not just for individuals but for entire nations), let’s educate our children (more importantly, ourselves) so we can lead lives that are just a bit more stress free.

Small Start, Big Dreams, Bigger Savings

The video that we have is a small start no doubt, but it is a start nonetheless. When you watch this video, don’t think of it as another site pushing budget tips into everyone, but more of a video to help you get inspired to budget. Now that I’m about to stop rambling, go out there and strike up a conversation with your neighbour, friend, relative, bus buddy, and spread the joy of saving a few dollars. What have you got to lose?

Dare I ask, but how often do you share your financial life with anyone? Let me know if you think we’ve gone crazy. I mean how often do you come across anyone who wants budgeting to be the “in” thing?

Happy Budgeting!
-the heaps! team

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Good Old Public Transport

Posted in Save money on June 22nd, 2010

Wahid Hussaini

By Wahid Hussaini

8 Comments

New Zealanders have a very high car ownership rate.  Even in cities like Wellington and Auckland, where there is a greater convenience of public transportation than the rest of the nation, citizens choose to drive to work. According to Metlink, only 17% of Wellingtonians and 7% of Aucklanders use public transportation as opposed to other cosmopolitan cities with upwards of 50% usage of public transportation. Even third world countries have better transportation systems than New Zealand.

Traffic in Wellington

Joining the Rest of the World

It is time for cities in New Zealand to join the rest of the developed urban metropolises (and even the not-so developed-ones) with the amount commuting we do in public transport.  Cities like New York, Seoul, Mexico City, Moscow, Paris, Tokyo, Beijing, and heaps of other cities have massive public transport systems. And there are many other cities which are currently building their own public transport systems.  For example, Bangkok, Thailand has been notorious for having traffic jams all over the city. Only when Bangkok recently built its own transit system have conditions greatly improved.

Auckland, which houses about one third of the entire population of New Zealand and has upwards of one million people, only has two and half train lines and only a few buses. These provide less service than public transit systems of many other global cities. There can only be so many roads built to provide for the hoards of traffic which travel in and out of the city. Environmental issues and traffic jams are major problems for such a small nation. New Zealand has a great environment and wonderful scenic views. Why must we destroy it with private vehicles?

Highway towards Auckland

I really don’t mean to put New Zealand down. I love this nation from Wellington to Waitomo, but I wish we can improve the layout of traffic in cities. Our metropolises have a great potential of improving the flow of traffic in and around them, which will enhance the look and feel of our urban environments.

Start Slowly

If public transportation scares you, why not start with using public transport once a week. You will then find that the bus and train system is not as daunting as it might seem and you will start to use public transportation always when going to work, school, or doctors appointments. Me personally being in Wellington for a short amount of time, it seems so much easier to avoid bringing the car into the city centre from the outer-laying suburbs due to the hassle of parking and traffic.  Wellington, being so small, is much better to navigate on foot rather than by car.

Budget in Transportation

In terms of budgeting, public transportation is very predictable when it comes to how much you spend a month.  You only have to give a certain fixed amount of your income to provide for public transport, whereas a private vehicle leaves you with much more unpredictable costs. Your private car can break down at any time, petrol fees are always swinging up and down, and traffic on the roadways can always build up when least expected (changing the required amount of petrol).

Keep in mind that you can avoid having to pay for petrol and other maintenance costs if you can avoid using a car. And I’m sure most of you can agree that parking in the city can put a hefty weight  on your wallet as well. If more people start using public transportation to travel in and out of the city centre,  and to navigate the city itself, the entire system will inevitably improve as  buses and trains will to have keep up with increasing ridership and will start to run more frequently.

If you start to use public transport more often (which is what we all should be hoping for),  definitely buy a monthly bus or train pass or a card that will speed up boarding and exiting (such as the Snapper here in Wellington) as those will save you money from buying the full fare every time.

Greater New Zealand

If enough New Zealanders start taking public transportation to work and school, at least in our larger cities, the infrastructure of the city will improve as this will do improve gridlock.  Not only is this better for your budget, but it will also improve the air quality of cities. Not to mention the emission of green house gases into the atmosphere.  It will decrease our dependence on foreign oil and imported goods (Japanese and American vehicles) which is better for our economy. All in a day’s work to improve New Zealand.

Buses in Wellington, part of GO Wellington

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Saving Money with Budgets: How to Divide Your Income

Posted in Budget, How to, Save money on June 18th, 2010

alicia@heaps.co.nz

By Alicia

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Understanding how much you spend on a daily basis is key to making positive changes to your finances. Setting (and sticking to!) a budget is essential when saving money as it will make you aware of where your money is going, find your money leaks, and help you change your habits so that you can achieve your financial goals. But how to start? When setting a budget, here are a few tips when dividing your income:

1. Pay yourself first

One of the most important things you can do for your financial well-being is to develop a habit of putting money into a savings account. It’s not so much how much money you put aside, as long as you do it on a regular basis. Savings accounts also allow you to earn interest (a percentage of money) off of your money so it will slowly grow, especially if you keep adding to it. Those in debt are also encouraged to put money into savings, as well as regularly paying off their debt.

After the tax department has taken their share, move at least 10% of your monthly earnings into savings before you can do other things with it. Many workplaces make it easy to move a portion of your income directly into your savings account. Ideally, you should put another 10% into your super fund (on top of your employer’s contributions). No matter how far off retirement seems right now, it is wise to start preparing for it now, especially since the cost of living has been known to double every 15 years. Total: 15-20%


2. Set aside money for your essential expenses

Only allow 60% of your salary for essential expenses like rent, bills and groceries. Consider getting a checking account for these day-to-day payments and keeping your saving account for long-term savings (emergencies, big purchases and holidays.) Look out for tips on how you can cut back on your daily spendings and reduce bills with cheap deals.

Total: 60%


3. Extras

The rest of your income goes to luxuries like entertainment and holidays. If you are overspending, this is the area where you will need to make cuts. By tracking your spending you can find where those ‘money leaks’ are: is it the daily bus fare or buying your lunch during the week? How can you cut back and save money in these areas? Finding these leaks in your budget makes you more aware of your spending and allows you to fill the money leaks without too much disruption. Total: 20-25%


Do this in heaps!

Heaps! categorises most of your transactions for you so you can see exactly how much of your income is being spent on various categories. You can also  re-categorize your transactions to suit your lifestyle. Heaps! will then look at both  your regular payments and daily spending to work out your total spending for that week, month or fortnight. Once it has calculated your surplus, or debt if that is the case, you can work with heaps! to create a budget that will suit your lifestyle and help you save money.

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Does Money Buy Happiness?

Posted in Save money on June 16th, 2010

Wahid Hussaini

By Wahid Hussaini

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The debate about whether money can lead to happiness is never-ending. Researchers, consumers, and citizens can never seem to agree, yet there are quite valid arguments on both sides.  Let us take a look at some of these issues.

Money Gives You a Social Life

Humans are very social creatures – perhaps the most social species on this planet.  Therefore, we do whatever we can to be in the company of others. Whether it is to go to a friend’s place just to relax, go out to town to watch a movie or have a couple drinks with friends, we will try to find something to do just so that we can be with other people. Many will agree that we can only participate in social activities with money, making us happy or at least content.  In this regard, money does lead to happiness.

But when you take a closer look, these social interactions happen only because you have money to spend on yourself and perhaps on your friends as well.  Then you may begin to ask yourself if they are your friends because they like you or because you have money to spend. This in turn can make you quite depressed, leaving you with the belief that you don’t have any real friends. As cliche as it may sound, it is up to you to see the glass as half empty or half full.

Stress Exists Because Money Exists

A blog about money and happiness by G.E. Miller , illustrates interesting arguments both for and against. Personally, I find money has a lot to do with stress. Having money leads to stress, not having money leads to stress.  Basically, the fact that money exists leads to stress! On one side of the argument, having more money leads to greed. If you have just gained access to a rather hefty sum of money (whatever this amount may be for you personally) you will be in search for more money. And so continues the ongoing never-ending cycle of seeking more money. Someone with a large sum of money will always be worried about how to sustain their wealth, keep it safe, and how to obtain more. It is the vicious cycle of wealth, leading to greed,  yielding stress.

But if the person is more responsible and can learn to appreciate the amount of money they have, then money can lead to happiness. If someone earns an income that provides them with the very basics – food, clothing, housing, bills – then money will at least lead to a content life.  And if that person can deal with their debt (by deal I mean not getting into large sums of debt) then they don’t have that added stress either.  Debt, of course, is something huge here in New Zealand and the rest of the developed world.  Having the ability to spend borrowed money has led to many problems for individuals and entire nations. Therefore, responsibility is a key factor in whether or not money equals happiness.

You Need Some Money to Live, You Want More Money to Live

An article by David Futrelle in Money Magazine explains this point rather clearly. When families of various income levels were asked whether or not they were very happy, only 22% of families earning less than $20K said yes.  This percentage goes up to 30% and 42% when asking families in the $20K-$49.9K and the $50K-$89.9K respectively. Going to the $90K+ bracket, happiness levels only go up to 43%.  So according to these numbers, happiness does increase with money to a point where people can at least be comfortable with their lives, covering the basic necessities that I mentioned before.  However, increased extraneous wealth does not lead to any additional happiness at all.

Source: U.S. Census Bureau; National Opinion Research Center; University of Chicago; David G. Myers, Hope College

Source: U.S. Census Bureau; National Opinion Research Center; University of Chicago; David G. Myers, Hope College

The same article shows the increase in average American family wealth, but no significant increase in levels of happiness. From 1957 to 2004, the average income after tax increased from $10,171 to $27,237, but the percentage of people being happy remained at a stable range of 35%-34% (Source: U.S. Census Bureau; National Opinion Research Center; University of Chicago; David G. Myers, Hope College.)

Happy Countries

Although there may be debate as to what the happiest countries are, Denmark, Bhutan, Sweden, Brunei, Switzerland, Puerto Rico, The Netherlands, Costa Rica, Finland, Canada and Colombia are generally on the list. What is surprising is that these countries have very distinct cultures.  Furthermore, nations like Brunei, Costa Rica, Bhutan and Colombia are on these lists despite being less economically stable than their developed Western counterparts. This suggests that money may not necessarily lead to the well-being of a country. The United States, the United Kingdom and Japan are generally considered to be less content than other nations despite them being some of the richest nations in the world.

Therefore, in terms of money, long-term well-being should be the focus, rather than temporary thrills.  So what gives you full fulfillment? Make a list of all the things that make you happy in life, and you may find you won’t need to splurge on an item to bring you temporary joy.  Appreciate everyone and everything that you have in life and you are likely to be more content.

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