Micro saving for micro-investing

What’s this- a second blog on Acorns? You betcha. And no, I’m not working with them- I’m just a little obsessed.

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I didn’t meant to write any more on the matter, but after my last post I was marveling at just how much money has accrued in my account through tiny top-ups. And then I got to thinking about how many equally tiny payments I make on a regular basis. You know the ones I mean- they’re the charges we tend to write off as the cost of convenience – $2 or $2.50 to the bank to draw money from an ATM is just a little sting when I get the money out, but that can easily add up to $200 across the course of the year. The same could be said for any time that I just grab a ‘quick bite’ because I wasn’t organised enough to bring something from home, or when I forget to pay a bill early and lose that discount.

While this could descend into another discussion on the Latte Factor, what it really reminded me of was this fantastic app that surfaced just before I left NZ (skip to about 50sec in for the real details).

 

The concept is beautiful to a compulsive saver. One big red button and the money you were going to spend on that avoidable little convenience vanishes from your account and pads out your savings instead. Isn’t that magical?

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It occurred to me that Acorns can serve the same voodoo hoodoo function. After all, most of these tiny expenses are ones that you’re already absorbing into your weekly budget, so if you’re not struggling financially you probably won’t even notice they’re missing (you do have a budget, don’t you?)

Decided to skip your afternoon coffee? Drop that $3.50 into your app instead. Walked the extra block to get to an ATM that doesn’t charge you withdraw fees? Squirrel that $2.50 away, baby.

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Now Acorns is my app of choice here (because as far as I’m aware, in Australia it’s the only choice) but the Red Button saving technique that I’ve definitely just invented can transfer to any of your savings efforts.

Operating in cash? Physically take that money out of your wallet and tuck it somewhere else. Make sure to keep it separate from your daily spending money, and transfer it out of your bag as soon as you can- As they say, out of sight, out of mind, and on your way to a million buckaroos!

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…I may have made up that last bit.

 


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Micro saving for micro-investing

Are you living like a Millionaire?

Wish you were a millionaire?

I don’t blame you- who doesn’t?

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Actual archival footage of me with money

Even if the actual number of zeros in your bank account is a little less than awe-inspiring, there are still ways to feel like a millionaire with your current income. For example, how do you feel every time one of those big, ugly annual bills come in- probably not great, right? You may have to put it on the credit card and watch that interest mount until you can pay it off, or perhaps you have to dig into your travel fund when the car insurance comes knocking.

It doesn’t have to be that way! Imagine that huge bill coming in, and paying it without a second thought- no stress, no cold sweat, no credit.

But isn’t that a luxury that only a millionaire can enjoy?

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Not if you’re smart! (or just organised)

Being able to pay bills with ease is one of the greatest benefits of having a budget, at least for me and my sporadic performers income. While you might not see the benefits of budgeting for specific annual bills for a while, setting it up only takes a few minutes and the peace of mind it can give you is astronomical.

Why not sort it out now? You’re clearly not under the pump, since you’re hanging out with me. And if we’re anything alike, your procrastination urges have just kicked in- go ahead, make a cup of tea, I’ll wait.

Ready to go? Great.

Grab a piece of scrap paper, the back of an envelope, anything- this won’t take long. Jot down every annual bill you can think of. We’re talking along the lines of car or health insurance, pet registration, or any of the other grown up things you forget you need to pay before it’s almost too late (you may need to dive into your email to look up exact charges for some of them).

Think you’ve got them all sorted? Awesome! Tot all of the figures up and try not to think about how big that total figure is. Have a sip of tea. Now divide that total figure by the amount of paydays you have in a year and we’re almost done.

Your homework is to open a new zero-fee bank account and set up an auto-transfer of that sum every payday into your newly created ‘annual bills fund’. Set and forget!

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You may find that this system needs a bit of a breaking in period (depending on when your next bill is coming due), but eventually you’re going to be living the stress-free bill paying life of a millionaire. Any time your butler hands you a red envelope on your silver platter, you can smugly flip your hair (or whatever the guy equivalent of this is- please let me know) and pay it without  second thought.

‘But wait a minute!’ I hear you cry, ‘All of my annual bills add up to fifty bucks a pay cycle! I can’t just lose that money every week, I need it!’

I feel that, really I do. But what would hurt you more- the $50 loss every week, or the $600 bill when you’re least expecting it? This is not a bandaid situation where it hurts less if you do it all at once- set up your auto-saving now, and soon you won’t even notice those missing few dollars, I promise.


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Are you living like a Millionaire?

How the bank almost got me

Banks are funny things. Credit cards are funny things too. There’s something about turning money from something heavy and real to numbers in a computer that seems to make it much less…worthy. More like monopoly money that we shuffle among ourselves than real,  valuable currency.

 

Prior to this year, I’ve never had a credit card. I was burned my first year out of home when my bank offered a ‘complimentary overdraft’ on my account of $2,000. It vanished in a matter of months (a good chunk of that went on a shopping spree when my little sister came to visit), and I’m pretty sure I was paying it off for the next two years. Lesson learned! There’s nothing more depressing than getting a paycheck and realising that none of that money is even technically ‘yours’- it all has to go straight to the bank.

Cut to five years later and I was finally tempted back into the world of credit by an unmissable offer on a card with no annual fee. I’m pretty on top of my spending now, so as long as I was careful to pay off my card each month, I was getting 50,000 frequent flyer points for free! How could anything possibly go wrong?

 

Ahhh, but here’s the thing the credit card companies know that we’ve all probably figured out the hard way – chances are, you’re going to be unconsciously spending a buttload more if you’re putting it on plastic.

Don’t ask me how it works, I reckon it’s hoodoovoodoo. All I know is, for the three months I was putting every payment on card, my spending was sitting a lot higher than it normally would- even though I have a rock solid budget and I knew exactly how they were trying to hook me!

Now I’m not saying I’ve been flashing around dolla dolla bills y’all…

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Does anyone think that getting hit by a solid gold coin would really hurt?

…probably worth it though

…but a brunch here, a book purchase there- it all starts to add up across the course of a month. And if you’re not seeing those purchases appear on your statement for a few days, it’s easy to forget that it even happened, and so you’re ok to spend juuuust a little more until that hideous bill arrives at the end of the month. Hoodoovoodoo!

So I’ve tried being a credit-carrying adult, and I guess I failed? Or maybe realising that I was altering my spending habits means that this counts as a pass (after all, you should never let the bank win).

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This card came with a year of free usage and as a newbie to the credit card rewards world, I have to confess that I’m still bemused and amazed that every month I’m racking in more frequent flyer points off my daily spending than I did flying to the other side of the world (!!) I still have seven months of free card usage before I have to cancel it, so it seems a waste to leave it in a drawer and miss out on some of those points that could help me get back across the world in the next few years. But how to do it without having to chip into my savings to cover that extra bit of free spending I’ve been suckered into?

I’ve decided to come to a compromise- bills are going to keep going on the card, but for the rest of my spending, cash is back to being King, baby. I’m going ol’ school and withdrawing my spending money for the week until I’ve built up my savings again. Time to go back to filling that piggy bank with change!

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Yes, I’ll take any excuse to GIF my spirit animal

This post was triggered by the extremely disturbing ‘debit card for pocket money’ that facebook threw up at me because apparently it thinks I should have spawned some rugrats by now. It looks like a great idea on the surface- parents can preload cash for their kids and the app seems to have integrated savings system- but with Visa pulling the strings, it all gets a little icky. On top of an annual card fee for the pleasure of not handing your kids cold, hard cash, I’m not sure parents should be comfortable letting one of the biggest credit card companies in the world groom your pre-teen for credit card ownership. What do you think?

 

 


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How the bank almost got me

I solemnly swear that I’m up to some good

It’s easy (for me, at least) to spend a fair bit of time thinking about where my money is going- or rather, where it’s vanishing to.

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This month I want to start spending more time thinking about where my money is going. And yes, that is a very important set of italics.

I’ve reached a stage with my money where I’m no longer the panicking, impoverished arts student. I wouldn’t say that I’m functioning with a grown-up level of income (what’s a real job again?) but I am at a point where it’s time to start thinking about how my spending is serving the world – what lives am I changing, what values am I representing?

I’ll be the first to raise my hand and confess that I’m frequently guilty of going for the bottom line. Why bother spending top dollar on some boring essential when I can duck down to Big W and get what I need for just a few dollars? But it’s time to stop kidding myself (and yes, this hurts). More often than not that bottom dollar is supporting sweat-shop labour, unsafe conditions, and probably terrible environmental practices.

If I’m voting with my money, then I sure don’t want it to be going to those people. I want to live in a world stuffed full of companies that are truly trying to make a difference! Hell, I want to live in a world that still looks like our world in fifty years. If that means shopping a little more mindfully and perhaps forking out more for businesses that support my goals, then I guess that’s a small price to pay.

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WALL-E is adorable, but not if his world becomes our reality

While I’m at it, I’m going to do my best to support the people with the dreams! The good folk in my area who have taken the dive and are trying to make good when the whole world says they can’t. I’m talking delicious freshly baked breads, beautiful plants (from somewhere other than the supermarket I’msosorryIcan’tleavethemtheretheyneedmeeee), handmade ceramics, locally grown organics, coffee from that new spot that just needs time to become the next big thing. Doesn’t that just sound like the dream?

And maybe I will have to make some sacrifices to follow through. Maybe I cut down my takeaway coffee habit to so there’s money to pay more for my veges, or maybe I save for the items I truly want to bring into my life from suppliers that I honestly want to support. The great thing about having a budget is that it’s totally possible to look at your spendings in black & white and re-evaluate as circumstances change.

I’m not going to lie, this is going to be hard for me. After so many years of being dirt-poor, parting with more money than I absolutely have to is going to take some getting used to. But I’m going to take a big ol’ breath and let go of the reins a little, putting my money where my mouth is. Because what’s the point of money, if we’re not using it to make the world a better place?


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I solemnly swear that I’m up to some good

How to win at Rewards Programs

I love a good reward program.

Growing up in a family with three young children and a business to run, I think that money must have frequently been tight for my parents. I don’t recall ever noticing that it was a problem though, because if the toaster broke down, a new one would arrive through flybuys. Grandparent’s birthday coming up? There were department store gift vouchers to spend from credit card points. I learned from watching my parents that if you were patient and consistent, reward schemes could be used to bridge gaps or nab those products no-one ever really wants to spend money on.

Once I moved to Australia, I discovered that loyalty schemes really weren’t as big of a thing- back home in NZ, it seemed to me growing up that everywhere offered Flybuys! I think people of my age saw me as a bit of an oddball as I dutifully signed up for a variety of reward programs and scanned my card with every purchase. What about my personal data?? (Look, if The Man wants to know how many times a week I buy bananas, they’re welcome to that knowledge)

It took a while for points to accumulate but when my trashy plastic smoothie blender started spewing smoke about six months ago, I jumped online & voila! Enough points saved up for a slimline fancy model and free shipping to boot. One less thing that I have to waste my hard earned money on, and a pricier  model than I could have ever afforded to splurge on! Which is win-win, because I’m trusting that it will last longer than an inferior version, and the warrantee is better if it doesn’t. Quality over high-churn plastic, folks!

The benefits aside, nothing every really comes for free, and most Reward Programs are very cleverly set up to slowly tempt you into parting with more of your hard-earned money. Here are a few things I’ve learned (some the hard way), that mean you can be sure that you’re always coming out on top.

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THOU SHALT NOT CHANGE THY SPENDING HABITS

The Man never wants you to have something for free. Any loyalty scheme you sign up to will constantly be trying to edge your spend a little higher, and then just a liiiitle higher again. Resist, friends! If an offer is tempted you to spend more than you’ve budgeted or intended to spend, disregard it immediately. Spending more than you want to means that you’re not winning at all- if you weren’t intending to drop $40 on that shiny new product but the thought of those extra 300 points is oh-so-tempting, step awaaaay from the offer. You’re not that easy to play!

THOU SHALT SIGN UP WISELY

Never really shop at a certain store? Don’t let them talk you into signing up for their reward scheme. You don’t need that sort of clutter in your life and handing over your contact details just results in the temptation of endless sales. Save your buying power for programs where you actually have a chance of redeeming for a reward.

THOU SHALT RECONSIDER PROGRAMS AS CIRCUMSTANCES CHANGE

There are two main supermarkets near my house. Coles offers Flybuys, and Woolworths offers Everyday Rewards. As you can probably guess, traditionally I’ve been more of a Coles girl, preferring to save points towards a product redemption than a cash discount off my shopping. However, recently Everyday Rewards recently upped their game by offering conversion of their points to Qantas Frequent Flyers- the same rewards system my credit cards work towards. What’s a girl to do? With over $100 of Flybuys value stockpiled for a rainy day, my efforts don’t need to be focused there. Time to watch those Frequent Flyer points grow!

THOU SHALT PLAY REWARDS SCHEMES OFF AGAINST EACH OTHER

Here’s the thing- rewards schemes do farm my data. Do I really care? Not particularly- how much I spend on Cookies n’ Cream isn’t information that I would care about handing to a stranger on the street, so I have no problems with the supermarket knowing it either. And there is a massive upside to them tracking my spending. After my switch to Woolworths, you know what happened? Coles got a little bit lonely! They started sending me emails- ‘Spend $90 a week for four weeks and get $50 off your next shop!’

Sorry Coles, that’s more than my weekly budget, and as we all know from the first rule of Rewards Programs, you don’t change your spending to earn a reward. Even spending an extra $10 a week on products I don’t need would have made the $50 reward redundant.

I stick to my Woolworths spending.

A few weeks later- ‘Spend $70 a week for four weeks and get $50 off your next shop!’ Now we’re talking! $50 is a decent chunk of a week’s shopping, so I switch my supermarket for a month and enjoy a final week with a sizeable chunk off my final spend.

Can you guess what happened next? You betcha- I get an email from lonely little Woolworths- ‘Spend $80 a week for four weeks and get 12,000 bonus points.’

Now I know it’s hard to grasp the value of those points, but to give it perspective, Woolworths normally offers one point per dollar spend- so those 12,000 points are a mighty big apple that can be converted into some pretty big savings. I swap back.

Do I think that either of these huge supermarket chains actually care about me as a customer? No way. But I do think that they have very smart computers that track changes in my spending habits and link me to offers accordingly. Make them panic and see what your big dollar reward scheme will do for you.

THOU SHALT NEVER LET THE CREDIT CARD WIN

For the most part, I am SO against credit cards- like most financial nerds, I see the spiraling holes that they can suck people into. Any support that I’m about to offer for their schemes is conditionally that you’re in control of your finances enough to be currently living debt free. Again, THOU SHALL NEVER LET THE CREDIT CARD WIN.

We good? I’ll continue.

Credit Cards offer some of the fastest ways to earn rewards on everyday spends- however when tempted by a credit card reward scheme, it’s important to consider the value of what they’re offering to you. Amex offer a huge return on rewards, but their cards are also hella expensive. Do you want to be paying $400 a year for your card to receive $400 of travel credit you’re realistically not going to have time to use?

And then there’s the other trap, where a card seems reasonably priced, but when you get down to the nitty gritty, the points on offer still aren’t worth it. Indulge your inner financial nerd, google the actual dollar value of the points on offer. For those playing along at home, apparently a Qantas Frequent Flyer point is currently worth around $0.02 (depending on how they’re redeemed). So if a company is offering 10,000 bonus points, you’re looking at roughly a $200 usable value. If the card has an annual fee of $150, is it really worth it? Or if you have to meet a minimum spend to activate those points, is that spend going to push you way above your usual budget? Could it be that they’re really just trying to groom you into a spending habit? THOU SHALT NEVER LET THE CREDIT CARD WIN.

But Abbie, don’t you have a credit card?

You’re right, dear reader. Consider me busted. But while doing all my credit card research, I stumbled across a credit card that was offering me Qantas Frequent Flyer points- the same points I had already collected for flying to Italy and back. If I met their minimum spend for the first three months of the card, I received 50,000 bonus points (to put that in context, I received about 5,000 for flying to the other side of the world). On top of those points, I would continue to receive 1.5 points for each dollar spent- and the kicker?

The card is absolutely free.

The bank is so keen on turning me into a dedicated credit user that they’re happy to offer me a carrot I can’t refuse. Why? They’re trusting that having to meet my minimum spend for the first three months is going to groom me into a spending habit. They’re trusting that I’ll be negligent about paying off my balance every month and they’ll get me with interest. They’re trusting that I’ll either forget to cancel the card, or be so hooked that I’ll happy pay the $249 annual fee the following year.

Falling prey to any of these points means the Credit Card wins –THOU SHALT… I’m not going to repeat the point again, you get it.  You’re playing the banks at a game they pay people a lot of money to ensure you lose. You’ve got to keep on top of the ball if you want to come out on top.

….

THOU SHALT NOT LET THE CREDIT CARD WIN

(Sorry, I couldn’t help myself)

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Do you participate in any rewards programs? Did I miss anything? I would love to hear what you think!


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How to win at Rewards Programs

So why do you need a budget anyway?

Budgets are boring. Cocktails are fun!  Why should you even have to worry about something that your parents probably did at the kitchen table with a pencil stub and their trusty abacus when we’re living in a digital age, baby!

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Who needs a budget when your bank balance is at your fingertips and the world is your money-loving oyster. Besides, you’re not an idiot. You know how much you have in your account, and you have no trouble paying off your credit card each month.

So why should you have a budget?

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Because it’s time to enter the big-kid world now, my child.

If you’re earning money and spending money, and you want to continue earning and spending that money in a stress-free manner long into the future, then you need to have some sort of idea of how you’re going to do that. Do you really want to leave it up to chance?

Budgeting can be as simple or as complex as you want it to be. I have a digital envelope budget system because it brings me joy and I like to see my ‘binge’ accounts accumulating for a guilt-free spend- your budget might basic as an account you spend out of and an account that you don’t.

What really matters with a budget is that you have an idea of how much you can spend at the supermarket before you have to cut down your coffee allowance, or that when that big annual expense creeps up, you know that there’s enough money set aside to cover it. Anything beyond that is extra-level adulting. When you’re ready to step up your game, here’s a few ideas?

-Like to have a big night out most weeks? Make sure there’s a set figure in your weekly budget for it.

-Planning a trip? Set aside a place in your budget to save for it.

-Sick of feeling guilty after an unexpected spend? Funnel some money into a ‘Splurge’ account every week and enjoy.

At the end of the day, a budget is there to make sure that what you’re spending is less than what you’re earning. But with a little time to asses your finances and a teeny, tiny bit of ongoing maintenance, a budget can help you master your money and make sure it’s working for you, and not the other way around.

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How about you? Do you budget already? Would you like to hear more about my budget? Do you wish I would just shut up about money and get back to the acting thing? This gal wants to know!

 


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So why do you need a budget anyway?

5 Ways I Slash My Spending (because actor’s life y’all)

As a performer, life can have some ups and downs. Even with my Diversified Income Stream (I’m thinking of getting a trademark on that), without the regularity of a salaried 9-5 job money can sometimes get thin on the ground – perhaps I’ve taken some time of for a fun independent project or for a holiday. Or maybe it’s just been an expensive week!

Either way, here’s a list of the first five things I cut when it’s time to start trimming the budget. Ready? Let’s do this

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1. Bought Lunches

Yes, they’re easier and yes, I get that little hormonal kick that comes with spending money. BUT if I’m buying lunches for a week then that’s probably close to $100 that could be stretched into a full week of groceries. If money is tight, buying any prepackaged food is off the table (badum-tish). Bulk buy, cook a batch of something you’re happy to look at every day for a week, and get ready to save that moolah.

2. Movie Outings

Movies are my haven. When I emerge blinking into the sunlight after a good movie, it feels like my brain has gone through a wash-dry cycle and it’s ready to face another week. I normally head to the cinema on a Monday or Tuesday when tickets are cheaper, but even then I’m easily tempted by popcorn or a bottle of local brew. If I can’t trust myself to steer clear of the snacks, movie outings are out until my income stabalises. Time to stay home and make the most of Netflix instead!

3. Meat

Yup, you heard it. I’m not a vegetarian, but I always opt for free-range produce which is at the top end of the price range. Adding meat to a meal can instantly up the price by $10 or more so if I’m trimming my spendings, meat is one of the first things to go. No, I don’t replace meat with beans- beans are death.

4. Fancy Food

Yes, most of these points revolve around food. That’s because A) it’s my weakness, and B) The supermarket shop is the easiest way for me to slash my short-term spending. If I have less money than expected for a week or so, fancy foods are out. That means no protein bars, no out-of-season fruit and definitely no super-flash ice-creams. Remember, these are my short term solutions – I’m pretty sure that I can survive without Ben & Jerrie’s for a week or so (….pretty sure)

5. My Bank Card

Because I just can’t trust myself (see Point 2.)

Leaving my bank card at home means there is no way those extra little costs can accrue. I have a mental blind spot when it comes to pot plants and books, so those always seem to wrangle their way past my iron resolve to not spend money. Deciding in advance how much money I can spare for the week and pulling out that money in cash is the best way to ensure that I don’t end up in debt before that next paycheck comes through.

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And there you go! Five steps to cut that daily spending fast.

Take a cold, hard look at your bank statement and be honest with yourself, what’s on your list? If you had to survive for a few weeks less than your normal budget, what would you cut?


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5 Ways I Slash My Spending (because actor’s life y’all)