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Want to retire wealthy? Start with your 'money personality'

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For those seeking ways to build wealth (or just to get rich quick), there’s no shortage of advice out there.

Personal finance sites abound online, and self-styled radio talk show experts dispense wisdom with varying degrees of accuracy.

But one study found that your fundamental attitudes about money can be a predictor of your ability to accumulate wealth.

The study, published in the Journal of Financial Planning, looked at the correlation between certain behaviors and four “money scripts” — or, put another way, four money personalities.

And, spoiler alert: Only one of the four money scripts is particularly conducive to getting wealthy.

But Tom Murphy, a certified financial planner and CEO of Murphy and Sylvest, said the good news is, like anything, once you recognize that you look at money a certain way, you can take steps to change.

“Recognizing why you are doing what you’re doing is strongly correlated with changing it,” he said. “Lots of times, once people understand their money personality, how they deal with money, they can actually go in and change their behavior.”

Murphy said that money beliefs shaped by childhood trauma are, of course, much harder to overcome.

Nevertheless, parents who are conscious about the way they talk about money to their children — even in tough times — can help teach fundamental lessons about saving.

“Here’s how you teach the right lesson: When the child wants something, you tell them that’s fine, but they have to use their own money, and in two weeks, when it’s broken ... then they don’t have it anymore,” Murphy said. “Give the child the opportunity to make a bad decision.”

He gave similar advice about investing: If you manage small amounts of money as a kid, you have a better sense for how it works when you’re an adult.

“They either like it or they don’t — that’s a hugely valuable lesson to learn,” Murphy said. “And lots of people don’t learn that until their 20s or 30s.”

So which money personality do you have? Here’s how the four break down:

  1. Money avoidance: Money avoiders believe money is morally corrupting — that rich people are greedy and therefore they, themselves, don’t try to amass wealth when they get it.

  2. Money worship: Money worshippers believe that money will solve all their problems, and that their happiness and power is tied exclusively to having enough money.

  3. Money status: Those who follow the money-as-status script believe that their self-worth is equal only to their money. They tend to believe that it’s important to buy new things as a marker of status, rather than because they really need them.

  4. Money vigilance: People who are money-vigilant emphasize frugality and saving — and they’re also a little bit secretive about how much money they have.


You can probably guess which one tends to produce the most wealth over time: No. 4, or money vigilance.

But Murphy said lots of people hold a mix of these beliefs — and can exhibit combinations of unhealthy behaviors, like compulsive gambling or giving too much of your money away to charity. Even hoarding money and being unwilling to spend any can be emotionally detrimental.

Still, Murphy said that, above all, it’s important to pay attention.

Three Tips New Investors Must See

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When I first started investing, I had many questions. Fortunately, I had helpful and experienced investors around me who were able to guide me through my first steps as a stock market investor. However, others may not be so fortunate and may, as a result, be put off from investing due to fears of making a mistake.

Because of this, I thought I would answer three common questions that new investors might have.

How much should I invest in my first stock?

This may be the first question that many new investors might have. In reality, there is no simple answer to this question. It depends on a multitude of factors such as your risk appetite, portfolio size, and investment strategy.

Having said that, I believe that all investors should still follow a few rules of thumb before making a decision on this.

First, our investment size should be large enough such that the commission charges do not exceed 1%.

For instance, investors should try not to make a transaction below $1000 while using brokerages that charge a minimum of $10 per transaction. Overlooking the effects of these transaction fees could be detrimental to our overall portfolio returns.

Second, investors should diversify their portfolio adequately and each stock should ideally not exceed 10% of your entire portfolio. This is to ensure that any bad investments cannot overly affect your total portfolio returns.

Where can I get stock ideas?

Recently, I wrote an article on three good ways we can screen for stocks. Firstly, by screening for stocks those are undervalued or trading at low premiums. Investors can also take a top-down approach and seek out growing industries, before narrowing their options to specific companies within that industry.

Finally, and maybe the best option for new investors would be to use a stock recommendation service that provides monthly new stock picks for investors. It is important to choose a reasonably priced stock recommendation service that has a long history of beating the market.

Should I actively manage my own portfolio or use professionals?

Before deciding whether to manage your own portfolio, it is important that we understand our own investment capabilities.

Investing requires patience, good control of emotions, and an understanding of businesses and stocks. New investors who are looking for above average returns and have the confidence and knowledge on stocks should consider managing their own portfolio. This is because we can have better control over our finances and can avoid paying hefty management fees.

Unfortunately, there are also often numerous retail investors who over-estimate their capabilities or are prone to investing mistakes due to greed and fear. This has led to retail investors underperforming the index by a considerable amount.

For instance, between 1990-2000, the S&P 500 index returned 7.81% annually. On the contrary, retail investors averaged only 3.49%. If you fear that you are unable to make good investment decisions due to poor control of emotions, seeking a professional for help may be your best option.

The Foolish bottom line

New investors will unsurprisingly have many questions before they start investing. Hopefully, this article adds a little bit of insight for new investors who are just starting out on their investment journey.

Top seven tips for saving money and making your dollar work for YOU



Saving money and cutting costs is often as exciting as watching paint dry.

But finance guru and Sugar Mamma founder Canna Campbell has revealed her seven top tips to get you enthusiastic and confident about growing your bank account.

The Australian video blogger says getting yourself into a healthy routine with money is the best starting point for saving money and making every dollar count.

In her latest YouTube video, Canna shared seven simple ways you can cut costs and squeeze every penny so you can sit back and watch your savings flourish.

1. Have a Deadline

Canna says setting yourself a reasonable but clear deadline for your savings goal is the first step towards maximizing your money.

If you have a goal of saving $10,000 in five months, the finance expert recommends pinpointing a specific date on your calendar for your deadline - which instills a sense of urgency in your mind every time you see it.

'That way you feel feel a lot more accountable and realize that time is ticking for your end date,' Canna said in her video.

2. Have a Budget

The second step in Canna's seven saving tips is to outline a tight budget for your spending money.

Setting a budget helps savers identify spending habits and provides a clear picture of what you really value.

Knowing what you are spending your money on every month is also a great way to realise what needs to be culled and what is necessary.

'Budgeting is a good way to show you problem areas and opportunities for saving money,' Canna adds.

3. Make a Dedicated Savings Account

Without a dedicated savings account to watch your money grow, Canna warns it is difficult to stop yourself from recklessly spending.

Designating a specific account, preferably with a nickname which mentions your goal, is a surefire way to prompt yourself to keep accumulating cash.

Canna says a savings account gives your goal direction, flow and purpose.

'A feeling of progress fuels continued commitment and dedication. Try to make sure the account is low fee or no fee at all too,' she adds.

4. Regularly Contribute

Creating a healthy routine and frequently depositing into your nest egg can excite you and encourages yourself to keep going because of how elated you feel as you watch it rise.

Creating a healthy routine and frequently depositing into your nest egg can excite you and encourages yourself to keep going because of how elated you feel as you watch it rise.

Canna also recommends putting aside every single extra dollar you may have leftover each month so your spending habits don't suffer.

'Every time you get a pay rise put the extra cash into your savings account so you aren't tempted to change your lifestyle,' she explains.

5. Remove Temptation

It may sound like a no-brainer, but removing any and all temptation to spend money from your daily routine is also an essential habit for maximum saving.

If you are inclined to duck into the shops whenever there is a sale or peruse your favourite fashion website, Canna says avoid this like the plague.

Instead, she says you should direct your free time to activities which centre around your savings goal.

'So if you are saving for a property, spend your time perusing property sites or going to open homes,' Canna suggests.

6. Review Progress Carefully

As your savings journey wears on Canna says it is good practice to review how you are tracking every so often.

It is a good idea to regularly check your account so you can feel a sense of elation or progress when you have a reasonable chunk of money.

Reviewing your progress can also give your ideas on what else you could be doing to bolster your savings or if there is any other saving opportunities.

'Little things really add up,' Canna says.

7. Reward Yourself

Lastly, Canna recommends giving yourself rewards and pit-stops every so often on your savings journey.

'We're all human beings with normal emotions, so sometimes saving can be painfully slow or painfully boring,' she said.

'But other times it can be amazing or exhilarating to give yourself a sense of achievement.'

Taking the time to reward good behavior it important but Canna also advises not to take too long of a hiatus otherwise you may fall off the bandwagon completely.

'Break down your goals into bite-size, manageable pieces and you will watch your savings grow.'

SAVING MONEY: John Scarborough says people should grow as much food as they can, and that lettuce, silverbeet and herbs are good crops to start with.

OLD age pensioners are the salt of the earth.

Most soldier on, without complaints.

They are not whingers.

Most went through hard times where seeking second-hand goods were a habit as there was no money to buy anything brand new.

They survived to become great, unheralded, true blue Australians.

Luckily in those days, the only drugs were tobacco and alcohol, not the "killers" we see on the streets today.

Now, on small pensions, they must learn how to top up those empty pockets.

Below are some tips and information that could work for you.

Be determined, be lucky.

Catalogues

First of all, don't regard the shopping catalogues that are shoved into your letterbox as junk mail. Far from it. They are valuable and your guide to cheaper shopping. We study them; make our lists and do our thrice-weekly shopping trip - what we call our "big shop".

Because the big supermarkets are grouped together, it is not physically exhausting to visit each one, if your object is to save money.

It's not a wise thing to limit all you’re shopping to one supermarket.

With the fierce competition at present with the half-price specials they offer, study each catalogue carefully and mark off the items that interest you and will benefit your pocket. Relax with a cup of tea or coffee, and a nice digestive biscuit. Be at peace but alert. If a supermarket offers you a regularly used item at half price but it's a big quantity, talk to a friend or a relative and go halves.

With these half-price specials, you are buying two for the price of one, therefore not increasing your spending.

Shopping Lists

Now write down your shopping list and set out for the shops.

Remember, if you have a certain day for your shopping and your pension is not paid the same day, you can ask Centrelink to change the day you receive the pension.

For example, we changed our pension day from a Thursday to Wednesday, to suit us.

Take it easy at the shops. Sit down in the air-conditioning, have a cup of tea or coffee and relax. Remember, this day you are saving money. Don't rush, be calm and save.

Buying Meat

Buying meat at a supermarket is not a wise option. The only advantage to you, the shopper, is that it's in the same place you buy your groceries.

The supermarket meat packages are eye-catching as they concentrate on a price point. A single piece of meat, in a small tray, could be, say, $7 but when you look at the price per kilo, it is sky high, (pop a Valium)

If you are curious, visit your local butcher and compare the price, you will be surprised.

We shop at a local butcher in Burnett St, Bundaberg, where you can buy a couple of kilos of pork spare ribs for just under $10 a kilo.

We mention shops as a guide. We do not gain financially from this. It's your choice. The same meat in a supermarket could be pushing to $20 a kilo.

We remember a time when breast of lamb, a fatty cut, was so cheap. Now one supermarket advertises this as lamb riblets. The price we are not sure on, but it must be $10 a kilo or more.

Once upon a time dog bones were free, a gesture of goodwill, from the butcher to his regular customer.

Fruit and Veg

The same principle applies to fruit and vegetables.

We shop at a greengrocer where they sell a lot of local produce, bought from nearby farmers.

Prices are very cheap on bucket lots but don't be surprised by a couple of duds.

Look at the price and save.

Shalom markets, on a Sunday morning, are where you can get bargains on fresh produce. I reckon many stallholders are farmers themselves.

But this market, besides being cheap, has a variety of goods on offer.

We buy our bread from Coles at $3 a loaf. It's an Italian-style Pane de Casa, which, when toasted with two free-range eggs, is a trip to paradise at breakfast each morning. That's our indulgence.

Weekly Menu

We find it essential to make a weekly menu.

You are able to see what you plan to eat each day, so shop for those ingredients.

If you're not making casseroles or stews, you won't need carrots, for example. Leaving carrots in the fridge for too long will make them soft.

Keep to your shopping list; don't be tempted to buy items not on your list. Also, if you make shepherd's pie or bolognaise sauce and you are only a couple or single, buy twice enough meat.

The extra portions that you make can be put in the fridge for the next day. Heated and served, it often tastes better as the sauce/pie is rested. Most importantly you have an evening off from cooking.

TV Shows

TV programs like Masterchef and MKR are okay to watch but expensive to copy.

I don't think your partner would be impressed with a small portion of something exotic with a sprig of parsley on the top.

The important thing to remember is "you are what you eat".

My wife and I eat fruit, vegetables and salads each day. Fruit and veg, or fruit and salad. When you really think, these are natural and fresh and should contain all the natural ingredients and vitamins to satisfy your body.

I know fresh and natural have sustained my body and possibly made me look a bit younger for my age. I don't need expensive anti-ageing cream, I get mine in an apple or similar.

Remember, an apple a day keeps the doctor away, and the dentist at bay.

Payments

Pensioners receive their pension every fortnight, which means there are 26 pensions in a year.

Now, instead of spending your pension every two weeks, spend it every three weeks.

Therefore, in your mind, you receive 17 pensions.

Okay, still with me?

Because it's become three weeks, that should become your main shopping day.

Obviously you will have to top up with the basics, such as milk and bread, and perhaps a beer in between main shopping days.

You will need determination to get it to work for you, otherwise be lackadaisical and you will fail.

Now because you are only using your new 17 pensions, you have what we call "nine free pensions" (your 26 fortnightly pensions have become 17 three-weekly pensions.

With those nine free pensions you can put money aside for rent, rates, power bills and holidays, which you deserve.

Also splurge on a new dress, a new took box, whatever.

We managed to save money, once the system was working, for a cruise to New Zealand. With the extra though, it's important to "kill" those big bills quickly.

But be careful with your money.

It will take a bit of time getting used to changing that fortnightly pension into a pension you start spending every three weeks.

It works very well for our household, a married couple. It's all about being strict with you and then enjoying the benefits of those nine extra pensions.

Other Ways to Save

Look at other ways to save money. Look at growing vegetables in pots if you yearn for that "younger look" and want to eat fresh. Good starters are lettuce, silverbeet and herbs if you're an inventive cook.

An herb assortment relates to your cooking requirements, so easy starters are parsley and basil.

With lettuce you buy a punnet containing, say, six seedlings. You can get those six into a big pot. Water them well, give them a nitrogen fertilizer weekly and you will harvest six lovely lettuce.

They'll cost you about 50c each. In the shops you'll pay up to $2 a lettuce, but yours is fresh from the pot and chemical free.

Another good tip is put all your gold loose change in a moneybox. Open it in December and have a very merry Christmas.

Another is, if you are a couple, open separate bank accounts away from your usual joint accounts. Use it to put the odd $5 or more into this account.

Just let it grow, don't use it.

Open the account with someone like Bendigo Bank, it's fee-free. In no time you have $100 or more, enough to take your "old dutch" out for dinner.

Health

Now a reminder to your health providers at the end of the telephone line.

The Home Doctor phone number is 13 55 66. If you have an illness of just feel crook, remember this is a free service. It's bulk-billed to Medicare, so you do not need money and they come to you.

If your mind fails you at times, like the writer, keep your scripts with your chemist. They oversee your health for free. They supply you with blister packs containing your medicines. If you are sick, many will deliver to your door.

Also remember chemists are professionals. If you occasionally question your doctor's view, medicines, the chemist is a good bloke or lady (better not say sheila) to talk to. Also they have a sense of humour, like mine.

You come out with a grin on your face. A laugh a day is a good target.

That's all folks. We hope you succeed. It took us a bit of time getting used to it, but we made it work to our benefit.

Now it's natural for us to think of 17 pensions a year and nine free ones.

Good luck.

Five money tips to give your children before they start university



In the coming weeks, hundreds of thousands of excited 18-year-olds will be heading to university. It is daunting for both the new generation of undergraduates and their parents.

University will be a long list of firsts – and many of these will involve money. Having a bank account with an overdraft (and very likely the offer of a credit card, too) will be just the start. There will be rental contracts and deposits, student loan borrowing and, for some, the eye-opening experience of doing a grocery shop.

What is the most useful financial advice a parent or grandparent can impart? Here are five suggestions.

Basic planning

Many 18-year-olds will never have budgeted properly in their lives, and having to meet essential food, housing and other costs could come as a shock.

Helen Saxon, the chief money analyst at moneysavingexpert.com, said: “They’ll need to sit down – and maybe parents can help in these remaining weeks – and work out how much cash they’ll have coming in, including their student loan, anything parents are giving them and any earned income from work.

“If parents impart one tip to their son or daughter, make it this: don’t spend everything at the outset. They may want to join every university society, but unless they’ll be doing paid work during term the money they have at the outset needs to last.”

Ms. Saxon said it would be helpful to plan their spending in terms of weeks or months. It’s important to point out that spending on socialising is fine – and a big part of university life – but it needs to be affordable.

The allure of an overdraft

A student bank account with a 0pc overdraft can be an incredibly useful safety net. But the dangers of an overdraft – which can seem like free money – are obvious.

Ms. Saxon said treating the overdraft as a “buffer” rather than accessible funds is imperative. “That overdraft is a safety net, and needs to last all year,” she added. “While 0pc overdrafts are useful and should help with cash-flow, they should not be treated as available funds. An overdraft is a loan that must be repaid.”

Telegraph Money’s favorite student current accounts are the Santander 123 account, which pays 3pc interest on balances between £300 and £2,000, and Nationwide FlexStudent, which has an overdraft rising to £3,000 by your third year and pays 1pc on credit.

The HSBC student account is great for freebies – it comes with a £60 Amazon voucher and a year’s free membership to Amazon Prime, but pays only 1.5pc on credit balances.

Credit cards

Unless their parents are wealthy and generous, most students will have cash crises at university – and a credit card could seem the answer. It’s incredibly important, however, to make sure borrowers understand that credit isn’t interest-free in the same way as a student overdraft.

Highly organized borrowers can make use of credit cards and, by paying them off soon enough, avoid costs while benefiting from the perks – but that’s a steep ask of a student.

The HSBC Student Visa Credit Card, connected to the student account (see above) provides up to £500 of credit with an interest rate of 18.9pc. It also offers cashback on some purchases, and the chance to win NFL tickets.

The Nectar Low Rate Credit Card, offered by Sainsbury’s, has an interest rate of just 5.94pc with a credit limit of £1,200. The student can collect Nectar points too, which could help them save on the weekly shop.

Understand your student loan

Getting to grips with this controversial and complex arrangement now could help indebted graduates down the line.

In the post-2012 student loans system, those graduates earning less than £21,000 (the threshold for repayments) are charged interest at RPI, currently 3.1pc. Those earning more than £41,000 are charged RPI plus 3pc – so 6.1pc – with a sliding scale in between.

Bizarrely, the maximum possible interest applies to the debt while they are studying, meaning that it will do nothing but grow. Student debt is cancelled after 30 years of repayment, so for many the size of the ultimate borrowing will not be relevant.

Safeguard your credit rating

Numbers disclosed by Telegraph Money last month showed that the typical student has a credit score 15pc lower than the national average.

While a student loan won’t show up on a credit report, other outstanding debts do so loans and credit cards need to be managed. ClearScore, the firm behind the research, found a quarter of students have a personal loan.

A quarter of students had also admitted to defaulting on a debt – most likely a mobile phone contract – and this too can wreak havoc. Regularly spending on a credit card while paying it off can actually help a credit rating. But using it to fund their lifestyle could land them in hot water.

The easiest trap to fall into is with utility bills. Half of students reported being listed on bills alongside housemates. In most cases, providers won’t treat you as financially linked, but if you set up a joint bank account to pay bills then a default could hurt your credit rating.

Ewan Armstrong, 20, a human biosciences student at Exeter, shares his experience

I decided not to have an arranged overdraft when I started uni a year ago: I have always dreaded feeling indebted. Instead, I keep a buffer of at least £100 in my account as a self-imposed overdraft that I promise myself I will never touch.

I have friends who’ve developed the terrible habit of refusing to check their account balance. This out-of-sight, out-of-mind mindset will catch up with them in the long run. I look at my balance and account summary on the NatWest app every other day.

A recent phenomenon among students is Monzo cards. It’s a debit card but one that tells you how much you’re spending on groceries, eating out, transport or bills.

I make most of my transactions via contactless or Apple Pay on my phone. Not even needing to enter a Pin runs the risk of making it easier to spend more, and I have found myself leaving the supermarket having paid contactlessly and not knowing exactly what I’ve spent.

Even so, I think the danger of thoughtlessly paying via contactless is offset by how using cards makes it easier to track spending.

There’s a perception that students can’t or shouldn’t invest money. But without a doubt the money-related achievement I’m proudest of is finding an app called Moneybox.

It rounds your card purchases up to the nearest pound and invests the pennies into a fund depending on your stated level of risk (for example, it invests 15p after you buy an 85p coffee). It has seamlessly invested about £1 a day for me over the past year. Aside from being an easy introduction to the world of investing, finding £300 tucked away in an app is every student’s dream.

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Arisa Horikawa

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