Savings: Tips to increase your Savings

1. Non Productive Monthly/yearly fees: Carefully read through one of your credit-card statements, staying on the lookout for ongoing monthly fees that you may have utterly forgotten about. Cancel any club memberships you don’t use and magazine subscriptions you don’t read. And if necessary, resolve to stop spending hard-earned money on lottery tickets.

2. Pay yourself first. This is a good time for an honest self-analysis: What have your saving habits been like in the past year? If it seems like all the money you make falls straight through your fingers and gets gobbled up by bills and other expenses, think hard about a reasonable amount you could start to view as yet another monthly bill. Could you handle one more $50 bill? How about a $200 bill? Even if you can only handle one more $15 or $20 bill, that’s better than nothing. Start squirreling that money away for yourself, pronto.

3. Decide where to put that ‘payment.’ If you plan to sock money away for several years until you reach a specific savings goal, your “pay-yourself-first” money could become automatic contributions to a mutual fund or other stock-oriented fund. If you need the money to be more liquid than that, consider an online savings or money market account that gets linked to your current checking account. Many of these online-only accounts are insured by the Federal Deposit Insurance Corp. (FDIC) and pay annual percentage yields between 4 percent and 5 percent or even higher, as opposed to paltry yields of about 0.2 percent to 0.5 percent for traditional savings accounts. To find such an account, go to Bankrate.com (www.bankrate.com), find the “Compare rates” section on the home page, select “Checking & Savings,” and then “MMAs/Savings Accounts.” (Just keep choosing MMAs and savings accounts as you click through.)

4. Pay ahead on your mortgage. By paying an extra $100 a month toward the principal on a $150,000, 30-year mortgage with a fixed interest rate of 6.5 percent, you’ll save more than $51,000 in interest and be able to retire your mortgage nearly seven years early. An extra monthly payment of even $20 or $25 can make a surprising difference. Granted, you’d stand to benefit more if you could invest that extra payment in an interest-bearing account offering a guaranteed higher rate of return than your mortgage rate. And paying off your mortgage early means you won’t have the tax benefits of home ownership for the same number of years. But if you’re after the psychological benefit of owning your home outright and spending far less on interest over time, then the extra-payment approach is the way to go.

5. Shed credit-card debt. Of course, the best way to avoid creating problems for yourself in 2007 is to use your credit cards cautiously and sparingly, always being sure to pay the entire balance off in full and on time each month. But if you’re already in a serious credit-card pickle as 2006 winds to a close – as millions of people are – try this: Transfer your credit-card balances to a card with a lower interest rate ASAP. You’ll save $730 if you transfer a $2,000 balance from an 18-percent card to an 8.25-percent card and then pay off your balance at a rate of $50 a month. Better yet, transfer balances to cards with rates of 0, 1 or 2 percent and concentrate on paying them off entirely while those low rates last.

6. Say goodbye to late fees. If you keep finding yourself getting hit with extra finance charges because your credit-card bill is regularly due before you’ve received your paycheck, call the credit-card company and ask to have your due date changed. It might take a few months for this change to kick in, but it’s well worth the wait.

7. Take your last puff. Depending on the wallop packed by the “sin taxes” where you live, you could save more than $2,000 a year if you go from being a pack-a-day smoker to a non-smoker. You’ll also qualify for significantly cheaper life-insurance rates after you quit.

8. Max out your retirement savings. Contribute as much as you can to a 401(k) or 403(b) tax-deferred retirement plan. You’ll get an automatic tax break, plus your employer may match part of your contribution – often 50 cents for each dollar you contribute for up to 6 percent of your pay. If your employer doesn’t offer this benefit, open a traditional individual retirement account or a Roth IRA and start saving anyway.

9. Review your estate plan. Do you have a will or a living trust? If not, get that taken care of this year! If you already have such documents drawn up, make sure they’re up to date. This is especially important if you recently had children or if kids might be in your future – but no matter what, these are vital steps for everyone to take regardless of their marital or family status.

10. Analyze your workday expenses. Instead of eating in restaurants every single day, bring your lunch to work from home as often as you can. Take your clothes to the dry cleaners early to avoid paying extra for same-day service. If it’s feasible where you live, try commuting to work by bus or by another form of public transportation. It could save you money and give you added reading and relaxation time.

11. Adjust your water heater. If you lower the thermostat on your hot-water heater from about 145 degrees to 120 degrees, the change isn’t likely to be noticeable. This step could save you more than $20 a year if you heat water with gas and more than $50 if your water heater is electric.

12. Upgrade old cooling systems. If you invest in a central air-conditioning unit with a seasonal energy efficiency ratio (SEER) of 14 or higher, you could reduce your carbon-dioxide emissions by more than 1,500 pounds a year. If you use a window air-conditioning unit in your home, consider replacing it with a new unit that meets Energy Star qualifications. That step could reduce carbon-dioxide emissions by more than 100 pounds a year. Also, remember to clean the filters in your cooling and heating systems regularly and to seal any leaks in central air-conditioning ducts.

13. Buy a programmable thermostat for your home. They cost between $30 and $100, but that’s money you’re sure to make back over the course of a year because your energy bills will drop. A programmable thermostat allows you to adjust your home’s temperature on a predetermined schedule, so you don’t unnecessarily waste energy when you’re not home or when you’re sleeping.

14. Don’t drive so fast. Driving your vehicle 55 mph instead of 65 mph can improve your mileage by about 15 percent and reduce emissions considerably. You’ll also get better mileage if you avoid quick starts and sudden braking whenever you can, and if you keep your tires properly inflated to the maximum recommended pressure.

15. Watch that idle time. Letting your engine idle for more than 30 seconds will burn more gasoline than restarting the engine, so turn the engine off if you expect a lengthy wait. Instead of idling at a drive-through for several minutes, park the car and go inside.

16. Map out your errands. Do multiple errands on the same morning or afternoon and plan out your trip ahead of time. Consolidate drives to locations that are close to each other. If possible, park your car in one spot and walk when you get there.

17. Take a break from driving. Consider walking, biking, taking a bus or carpooling whenever feasible. And if you have more than one vehicle, drive the one with the best gas mileage whenever you can.

18. Mow your lawn with care. Lawn mower engines don’t use a tremendous amount of gasoline, but they create more than their fair share of NOx, a main ingredient in smog. You can avoid emissions altogether by opting for a low-cost manual reel mower.

19. Do laundry efficiently. Horizontal-axis (front-loader) washing machines use far less water and 60 percent less energy than top-loaders. Regardless of the type of machine you own, save energy and money by using cold water instead of warm or hot. Run only full loads when drying clothes, and dry two or more loads in a row to make use of the heat already in the dryer.

20. Think about your refrigerator. Don’t locate this particular appliance in direct sunlight or next to the stove or dishwasher. Also, unplug that extra fridge, especially if it’s just keeping a six-pack cold.

Wealth Maximization vs Profit Maximization

Profit Maximization vs. Wealth Maximization

The objective of the firm is to maximize its value to its shareholders. Value is represented by the market price of the company’s common stock, which, in turn, is a reflection of the firm’s investment, financing, and dividend decisions.

The idea of wealth maximization involves increasing the Earning per share of the shareholders and to maximize the net present worth.
Wealth is equal to the the difference between gross present worth of some decision or course of action and the investment required to achieve the expected benefits.

Gross present worth involves the capitalised value of the expected benefits.This value is discounted a some rate,this rate depends on the certainty or uncertainty factor of the expected benefits.

The Wealth Maximization approach is concerned with the amount of cash flow generated by a course of action rather than the profits.

Any course of action that has Net Present Value above zero or in other words,creates wealth should be selected.

Frequently, maximization of profits is regarded as the proper objective of the firm, but it is not as inclusive a goal as that of maximizing shareholder wealth. For one thing, total profits are not as important as earnings per share. A firm could always raise total profits by issuing stock and using the proceeds to invest in Treasury bills. Even maximization of earnings per share, however, is not a fully appropriate objective, partly because it does not specify the timing or duration of expected returns. Is the investment project that will produce $100,000 return 5 years from now more valuable than the project that will produce annual returns of $15,000 in each of the next 5 years? An answer to this question depends upon the time value of money to the firm and to investors at the margin. Few existing stockholders would think favorably of a project that promised its first return in 100 years. We must take into account the time pattern of returns in our analysis.

Another shortcoming of the objective of maximizing earnings per share is that it does not consider the risk or uncertainty of the prospective earnings stream. Some investment projects are far more risky than others. As a result, the prospective stream of earnings per share would be more uncertain if these projects were undertaken. In addition, a company will be more or less risky depending upon the amount of debt in relation to equity in its capital structure. This risk is known as financial risk; and it, too, contributes to the uncertainty of the prospective stream of earnings per share. Two companies may have the same expected future earnings per share, but if the earnings stream of one is subject to considerably more uncertainty than the earnings stream of the other, the market price per share of its stock may be less.

For the reasons above, an objective of maximizing earnings per share may not be the same as maximizing market price per share. The market price of a firm’s stock represents the focal judgment of all market participants as to what the value is of the particular firm. It takes into account present and prospective future earnings per share, the timing, duration, and risk of these earnings, and any other factors that bear upon the market price of stock. The market price serves as a performance index or report card of the firm’s progress; it indicates how well management is doing in behalf of its stockholders.

Maximize Your Savings

Wealth can be maximized not only by intelligent investment decisions but also by maximizing your savings. If you earn more and spend the same the result will be no addition to your wealth. Here are some tips to maximize your savings.

Use common sense

Don't let rebates or coupons talk you into buying things that you wouldn't otherwise spend money on. "It always comes down to whether you need the purchase, of course. Don't go shopping just because you have a 25 % off coupon, you'll save 75 % by staying home,"

Use rebates wisely

"$50 rebate! Only $24.99 after mail-in rebate!" This is the kind of advertising that sucks us right in, particularly when it comes to big budget items. Rebates can, and often do, mean a great deal, but that's only if you use them. Too often, we buy a product based on the after-rebate price, then lose our receipt, miss the deadline, or forget about the rebate altogether. That's why if you're banking on a rebate you have to deal with the paperwork as soon as absolutely possible. Make photocopies of the documentation they require, and send in the originals via certified mail. Note the date that you mailed it on your calendar, and be on the lookout for plain or blank envelopes in your mailbox (many a rebate has been thrown out because it looks too much like junk mail).

Check out coupon books

I guarantee that at least one school in your town has its students selling these each year. They cost about $30 and are chock full of big deals on travel, restaurants, and entertainment in your town or city. If you don't know someone who's selling them, you can buy them at entertainmentbook.com, but here's the trick: New books tend to hit the shelves in August for the following year. If you wait until now to pick up your copy, you'll get a huge discount. Last time, they were selling for half-price, plus free shipping. If you're going on vacation this summer, for $15 it may be worth buying a book for the city that you're visiting.

Bargaining to get discount from list price.

Bargaining helps in getting discounts from list prices. It helps to increase savings. Specially if you are buying in bulk, ask for special discount. Sometimes meeting with store manager before placing the order prove more beneficial as he can offer you quantitative discounts. A lot of stores participate in what's called price-matching, meaning that if a product is on sale at a competitor, they'll sell it to you for the same price. Bring proof of the item's price at the other store (a circular will do the job) and show it to a manager, then ask for the discount. Most are authorized to give it to you, explains Nelson, who adds that she also asks retailers to honor other stores' coupons and even expired coupons with some success. Bottom line: You never know unless you ask, so give it a shot.

Search the Web for discounts

These days, "clipping coupons" is little more than an expression. Sure, your Sunday paper still offers tons of savings, particularly when it comes to department stores, but the Internet is the real jackpot. Sites like wow-coupons.com and redplum.com make it easy for you to sort by category, so you can narrow your choices down by grocery, retail, travel and restaurant deals. Just print the ones you need and if you're doing your actual shopping online, be sure to do a search for coupon codes before you submit your order, says Edgar Dworsky, founder of the consumer information site consumerworld.org. "If you go to an online site and see a field at the checkout that says 'promotional code' or 'coupon code,' that's your tip that somewhere in cyberspace, they may have coupons that will get you a percentage off of your order, or even free shipping."

Do a Google search, entering the exact phrase the company uses on its Web site, and you'll find a plethora of sites that offer codes. Granted, some of the deals may be expired, but it's well worth your time to plug a few in and see.

Think and Analyze:

Coupons are no longer limited to cereal and toothpaste, you can find them for nearly everything these days.

According to CMS, a coupon processing agent, less than 1 percent of the more than 300 billion coupons issued last year were redeemed. When you consider that the average value of each, it was a lot of savings that we as consumers passed up. Rebate, too, represent a lot of lost value. According to Consumers Union 40 percent are never claimed.

"I use coupons for everything, including the parking lot at the airport. I save $22 every time I travel that way," stated founder of the Web site couponmom.com, which offers links to deals and tips for maximizing your savings. Some people may find it embarrassing to pull out a coupon at the end of a meal, but trust me, your waiter has seen it before, and the savings, which can be ten or even fifteen percent, is worth it.

Seasonal Discounts

Seasonal discounts are a major source of savings. New year sales, spring sales, ester sales, christmas sales etc. can save a lot for you. If you have to buy goods that you don't need on urgent basis, waiting for such festival sales and discounts can be a major source of savings.

Savings and Budgeting

It's an avenue to know where your money goes and help you reach your financial goals, whether it's a new home, a comfortable retirement or just making it to your next paycheck.

When all is said and done, you simply can't spend more than you make, at least not for long.

What's going out?

The first step is figuring out where your money goes right now. Use an online worksheet or a plain old notebook to keep track of your spending for a few weeks. Go through your checkbook and credit card statements. Add up the amounts, and you'll have a good idea about your spending habits.

Budgeting isn't a punishment for not being born wealthy.

A few things to consider:

• Common budget categories include housing (rent or mortgage, homeowner dues), recurring bills (cable, utilities, insurance and credit card minimums), food and entertainment.

• Let your categories fit your life. You might have expenses for school-related items (tuition and books), pet care or travel. If your hobby is your passion, make it a category.

• Account for big expenses that occur once or twice a year, such as car insurance.

• Consider making your vehicle its own category. Payments are only the start.
  

What's coming in?

When your expenses are tallied, go through your pay stubs and calculate your average monthly income. Don't forget to include interest income, dividends, bonuses and alimony.

Once you know how much you earn and how much you actually spend, decide where and how much you want to spend. Divide by 12, and voilà -- you've got a monthly budget. Adjust as necessary until your monthly budget equals your monthly income.

Some things to keep in mind:

• Figure out which of your expenses are wants and which are needs. Actual needs are fairly limited: food, shelter, clothing. Nearly everything else is a want, but even the way we fulfill our needs involves choice.
  

• Essential spending comes out of the first 60% of your income. The rest includes retirement, emergencies, debt repayment, fun money, etc.
  

• Prioritize. Fund your retirement first, no matter what. Put enough in your 401(k) to grab the employer match. Then start tackling your debts.

• Don't forget an emergency fund. This will go a long way to keeping you out of debt should the unexpected happen -- and it will. If you don't have funds now, use your income-tax refund or set up a regular electronic transfer from checking to savings.
  

Take a little off the edges

Once you're on your way, keep track -- at first weekly, then monthly -- of where you're going off budget and adjust your allocations.

Food, for instance, often goes unchallenged. You might wince at the checkout counter, but you do have to eat. Still, there are ways to cut the food budget without sacrificing quality or quantity.

• Many stores reduce their products based on a 12-week cycle, so notice when something goes on sale, but don't buy until it hits the rock-bottom price.

• Keep a notebook for a while so you get to know the rock-bottom prices on items that you frequently purchase. Keep track of which products are cheaper store by store.

Food isn't the only place for savings. Here are some other ideas for keeping your budget on track:

• Bookmark deal-finding Web sites and check them before making any purchase online or any big purchase offline. Check websites for online bargains and coupons.
  

• Review your habits. Do you need the full-on cable package or caller ID? Do you pay full price at a convenience store for items you could buy for less on your weekly grocery shopping trips?
  

• Some people fritter away cash; others use a debit card as if it had unlimited credit. Whichever you might be, consider converting. A debit card devotee is more likely to think twice about spending cash, especially if you leave your ATM card at home.

• If things still aren't adding up, look at whether you need to adjust your allocations or change your spending habits.
  

Building the budget habit

Successful budgeting takes time and persistence, so don't be discouraged if you don't hit your monthly goals at first. Here are some ideas to make it easier:

• Write it down. If you don't, you probably won't stick to it.

• When good fortune comes your way in the form of an "extra" paycheck or a bonus, pay an annual premium, make an additional mortgage payment or use it for seasonal extras, such as summer vacation costs or Christmas presents.
  

• If you can't spend less, earn more.
  

• Get into the habit of thinking ahead. If you know your situation is going to change -- a new baby, new winter clothes, a new job -- plan for it and try to pay cash.

• Remember, budgeting is the means, not the end. Keep spending "mistakes" in perspective.

• As your income climbs, don't splurge until you're sure you're staying ahead of inflation. A good budget grows with you, so it's worth re-evaluating your budget every year.