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Kid's Birthday Party Save Money

If you choose to use the KISS principle anywhere in your life, you should absolutely use it when you are hosting a kids birthday party.  For those of you who are unfamiliar with the KISS principle it stands for “Keep it simple, stupid!”  We applied this principle big time when it came to our daughter’s first and second birthdays.  We just grabbed a picnic blanket, a couple of roast chooks from up the road and headed down to our local park with a couple of friends.  Simple, low stress and oh so cheap.

This year, with Miss Money turning 3, she really wanted a proper birthday party.  So, with much trepidation we decided to give it a go.  Kids birthday parties are a bit like weddings, it is easy to get carried away and they can easily become black holes for cash.  So here are 6 ways we saved money whilst still giving our daughter a fun birthday bash.

  1. Use Electronic Invites

We live in 2013.  Even my mother has a Facebook account.  People don’t need a little bit of paper to know you are having a party.  In fact if you give me one, I will put it on the fridge,  little hands will take it down and it will be most likely lost.  Send me an electronic invite and I can check dates, times, locations as required and I will still be able to find it when I need it.  Easy and free!

  1. Share The Party With A Friend
The Birthday Girls

The Birthday Girls

This was undoubtedly the best decision we made when it came to having a kids party, we shared it with one of the wonderful women from my mother’s group and her gorgeous daughter.  It meant that not only did we share costs and the workload, it turned the preparation time into fun too!  We did a joint trip to Costco with our kids to pick up the supplies and at the party it was like having a magic fairy there with me, things just happened and I did not feel responsible for making every single decision.  At the party everything was shared, we just had two birthday cakes and everyone sang one song.  The girls loved it.

Fiona was a dream to work with.  I think that both of us would describe ourselves as relaxed, so that really helped.  We all had so much fun that we will probably do it all again next year!

  1. Ditch The Theme Or Choose A Simple One
Not much of a theme but everyone had a great time

Not much of a theme but everyone had a great time

I have to tell you up front I am not a huge fan of the theme.  I know some people love it but all I see is more hard work and cost!  It makes me laugh when you talk about having a kid’s party the first thing people ask you is “What is your theme?” Theme?  “Errrrr, my daughter is having a birthday theme”, is always my response.

If you really want to go down the theme route, then make sure you choose a simple one and don’t go overboard on it because it really does add to costs.  So what? Your plates and cups don’t match your theme?  The kids don’t care and they only end up in the bin anyway.  In the end we did go a theme for this party, it was pink as it is easy and the favourite colour of both girls.  We got pink table cloths, pink balloons and dressed them in pink.  That was pretty much the full extent of it!  Easy and cheap!

  1. Keep The Food Simple

 

Nothing like the old style party favourites

There was no high tea or dessert bar at our party.  It was all about sausage rolls and party pies (on sale $6 for 30 from Woolies), home made chocolate crackles and honey joys.  We went the token fruit platter but that is about as fancy as it got, and the strawberries were on sale for $1 per punnet!!!  Fiona made some awesome “spiders” out of chocolate, Nutella and Chang’s noodles!!!  They were delicious.  We were worried about not having enough food, but as it turned out we had tonnes.  The truth is that no one really eats much at these things as the kids are busy running around and the parents talking, so try not to over cater, it can be a money waster.  Mind you we did an epic fail on this part 🙂 and we were eating chocolate crackles and chips for many days afterwards!

  1. Keep The Activities Simple
A couple of simple activities kept everyone entertained

A couple of simple activities kept everyone entertained

In our local area we have a council run service called the Magic Yellow Bus.  They roll up to a local park and plonk out a range of activities for the kids and then everyone just plays.  We decided to model our party on this, just with cake!  So we just put out a table of homemade play dough with the play dough stuff we already owned, I threw half my kitchen utensils in the sand pit with a few buckets and we had a craft table with some cheap bits and pieces I had brought from Riot.  Luckily, Fiona owned a small jumping castle so that got a work out too!

We avoided organised activities like pass the parcel as we had heard this can be very political now days and there can be fights over who gets what.  Apparently every kid also has to get a prize!  It certainly wasn’t like that in the 70s!

We did do a piñata which was probably not very PC but it was heaps of fun.  However, if you choose to do this for your party here is a hot tip – don’t choose one with a character on it!  Apparently some kids get very distressed when they see Dora, Octonauts or Hi-5 been taken to with a stick!!  We went the very safe 3 shaped piñata!

  1. When Someone Says They Want To Help – Say “YES!”

People love to be involved in your party, it gives them what is known in the business world as “buy in”.  They wouldn’t offer if they weren’t genuine about helping you and as they say many hands make light work.  It helps to cut costs and reduce stress.  We had people bring in plates of food, fairy bread, dips, mini pizzas and even pick up food for us that we had pre-ordered.  As we had the party at a local family day care centre we had an army of volunteers help to set up and even more volunteers to clean up.  To them we own a huge “thank you” as without them we would probably still be there cleaning now 🙂

Overall the party was heaps of fun.  We kept it as simple as possible, which saved us money and lot’s of stress over things that in the end don’t really matter.  I was scared to host my first kids party but I really enjoyed it and maybe I might even be brave enough to do it again next year (with Fiona of course!) 🙂

If you liked this post you might also like to read:

 10 Easy Ways To Save Money

5 Financial Tips You Need To Know Now You’re A Parent

How To Make Your Savings Work Harder

# The photos were all taken by the wonderfully talented Lisa Marie Craye of Ginger Snaps Photography.  Pop over and “like” her facebook page at Ginger Snaps Photography

* The Peppa Pig Cake was by the Jedi Master cake maker Patricia Kavvalos from Bake It Beautiful.  Pop over and “like” her facebook page at Bake It Beautiful

I am so lucky to be surrounded by such talented and generous friends 🙂

05/09/2013 27 comments
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Financial tips for parents

Let’s face it parenthood changes everything.  From your social life to your ability to go to the bathroom in peace.  Things are no longer just about you and your partner, there are other considerations that must be made.  With parenthood also comes extra financial responsibility, there are extra costs and quite often less income coming in the door as one partner stays home or changes to part time work.

So here are five financial tips that you need to know now you are a parent:

  1. You should make sure you have a Will. I know you don’t want to think about it, but a Will is crucial in making sure that your children are well looked after should anything happen to you, your partner or both of you.  It gives you the ability to say how your assets will be distributed and even who should have custody of your children should the worst case scenario occur.  If you have complicated family relations then a Will is even more crucial to ensure that your wishes are clear.  A Will doesn’t have to be expensive, you can get a Will kit from your local newsagents, do it online or do it through your solicitor (definitely worth the money if your affairs are complex).  If you already have a Will make sure it is updated to account for any changes in circumstance such as additional children or divorce.
  2. You should consider Life Insurance.  If it would be difficult for your partner to raise your children without your income, then you should have life insurance.  The same is true if you couldn’t afford to raise your children without your partners income, then you need life insurance on your partner.  Without trying to sound like a bad daytime TV ad, life insurance will give you peace of mind.  If you already have life insurance, you must check it and make sure it is enough now you have children.
  3. Get rid of your credit card debt.  There are several things the banks won’t tell you about your credit card.  Number one is that credit card debt is crazy expensive.  Generally speaking the banks charge you about 19% on your credit card, compared to official interest rates of 2.75%!  Secondly, if you pay the minimum repayment it will take you an eternity to get rid of it.  Just check your statement.  The banks now have to tell you how long it will take to pay off your balance at the minimum repayment.  Last time I checked mine, it was 64 years and 7 months!  The only way to use a credit card is to pay it off every single month.  If you can’t do this then cut it up and ramp up repayments to pay the debt down.  Please click here to see my top tips for getting rid of your credit card debt.
  4. Make sure you have an emergency fund saved.  You should aim to have six months of after tax income saved to ensure that you have the confidence to deal with any bumps in the road that life might bring like another baby or losing your job.  My mother always told me that when financial problems walk in the door love flies out the window.  Having an emergency fund helps to relieve financial stress when things inevitably do not go to plan.
  5. Be aware of the huge tax rates that can be charged on savings in your child’s name.  Most people don’t know this but investing directly in your child’s name is unlikely to be the most tax effective way of saving for your child.  This is due to tough penalty taxes for minors.  The penalty tax is applied to “unearned income”, that is money the child has not worked for and includes income such as interest, share dividends and distributions from trusts.  If you invest under your child’s name, the first $417 of unearned income is tax free but after that tax is charged at 66%!  Any unearned income after $1,308 is taxed at 45%!  Ouch! (Click here to see my full post on tax rates applied to children’s investments)

Parenthood changes everything.  I hope these tips help to better navigate the financial responsibilities that come along with it.

If you liked this post you might also like to read:

How To Teach Your Children About Money

3 Things You Really Should Know When Saving And Investing for Your Children

How To Pay Off Your Mortgage Faster

How To Boost Your Superannuation Balance While You’re A Stay At Home Mum

* Please note this is for your general information only and does not constitute financial advice.  Please see a financial planner or accountant to get advice specific to your individual needs.

20/08/2013 37 comments
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How to get the most from your savings account

Your savings are an investment.  They are not something that should be plonked into the same old  savings account because that is what you have always done.  You can, and should make your savings work harder.  With the latest round of interest rate cuts, interest rates are low and it is now even more important to make sure you are getting the best possible return for your savings.  “Don’t I just pick the account with the highest rate?” I hear you say.  Yes, generally speaking, but like most things it is not as easy as just that.  So here are a few things you need to look out for in choosing the best possible a savings account for your cash.

  1. What is the interest rate?  I know it is an obvious one.  The higher the better but there are a couple of tricks when looking at the rate.  Firstly, you have to be clear whether it is a bonus rate or not.  Bonus rates are an introductory offer which lasts for a period of time before the account reverts back to the regular interest rate.  The bonus period generally lasts from 3 to 6 months.  The trick is that once that period is over the difference in interest rate can be quite large.  For example one account I was looking at had a bonus rate of 4.6% but then reverted to 2.75% after 5 months!  There is nothing wrong with taking a bonus rate just as long as you know that is what you are doing and you are clear what rate the account reverts to.  In fact, you can take advantage of them then move when the rate ends if there is a better deal on offer.  Just make sure the account allows you to do this.
  2. How often is the interest paid? The trick is, the highest interest rate is not always the best as how often the interest is paid is an important factor too in determining your investment earnings.  Generally speaking the more frequent the interest payments the better off you are.  This is due to the power of compounding (click here to find out more about compounding).  So, when looking at two investments at the same interest rate, the one with the more frequent interest payments is better.  For example, a $10,000 investment at 4.7% paying interest monthly will make you $10 more interest over 1 year than the same investment paying annual interest.  It doesn’t sound like much but run that investment over 5 years and the difference is $61.  We all know every little bit helps!  Click here for a calculator to check out the impact of compounding and interest rates on your savings and to help you compare accounts.
  3. Fixed vs variable interest rates?   Most basic online savings accounts and cash management accounts pay variable interest rates.  This means that the rate of interest that you will be paid will rise and fall with changes in official interest rates.  Fixed rate investments, such as term deposits pay the same rate of interest during the term of the investment, regardless of what happens to official interest rates.  Fixing your rate is a good strategy when interest rates are falling because you lock in a rate but when rates are rising you miss out on higher rates during the term of your investment.
  4. Are you locked in?  In financial speak we call that the term of the investment.  Most online savings account give you easy access.  Term deposits lock your money away for a specified period of time.
  5. What fees are involved?  Fees eat away at your returns.  Given the low interest rate environment it becomes even more important to make sure you have a fee free account.
  6. Is there are minimum balance?  Be clear on whether the account has a minimum balance and whether you make that criteria.
  7. Other features.   Be clear on what sort of other features you would like to have on the account.  Do you want ATM access or do you want to limit access so you are less likely to raid the cookie jar :-).

So as you can see there are lots of factors that need to be taken into account when choosing the best savings account for you.  One of the best ways to compare all these factors is to use a comparison site.  These site don’t cover the whole market but they can certainly give you a good idea of what is out there and help you on your journey to get more out of your savings.

If you liked this post, you might also like:

 10 Easy Ways To Save Money

How To Pay Off Your Mortgage Faster

How Interest Rates Impact You and Your Family

How To Boost Your Superannuation Balance For Free!

* Please note this is for your general information only and does not constitute financial advice.  Please see a financial planner or accountant to get advice specific to your individual needs.

15/08/2013 19 comments
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How interest rates impact families

Interest rate talk is everywhere, especially with last week’s decision by the Reserve Bank of Australia (RBA) to cut the official interest rate to 2.5%.  Many people think that changes in interest rates impact only those who have a mortgage but this is simply not true.  Changes in interest rates impact everybody.  They influence whether individuals like you and I decide to save or spend or borrow.  Or whether businesses, large and small will expand or contract.  In this way interest rates impact the direction of the whole economy, impacting the daily lives of you and me.

So let’s start at the start – what is an interest rate?  An interest rate is simply the price of money.  The lower interest rates are the cheaper it is to borrow money and spend it and the less attractive it is to save money (because you don’t get much return on your savings).  The converse is true of high interest rates which make it more attractive to save and less attractive to borrow and spend.  Think about it, if interest rates were 15% it is very unlikely that you would want to take out a loan and buy a new house.  However, putting your money in the bank where you would get 15% interest would look pretty attractive.  In this way the RBA uses the level of interest rates to increase the level of spending or saving to make the economy go faster or slower as required.  If the RBA thinks the economy is growing too fast they will raise rates to make it more attractive to save and slow borrowing.  If growth in the economy is slowing then the RBA will cut rates to increase the attractiveness of borrowing and to cut savings.  At the moment the RBA are cutting rates as they are concerned about the economy slowing and so are trying to get us all to save less and spend more.

Things to watch out for in a low interest rate environment:

  1. If you are looking to borrow you must always remember what goes down must go up!  Yes interest rates have gone down recently but when low interest rates do their job and the economy picks up, interest rates will inevitably start to rise.  Don’t be tempted by the current low rates to borrow to the max.  Yes, take advantage of low rates but always stress-test your repayments to make sure that you can still make them at higher levels of interest rates.  For example, when we bought our house back in 2008 (just before the Global Financial Crisis hit), we were paying around 9.5% on our mortgage.  That meant an extra $1,500 on our repayments per month compared to what we are paying now.  A decent chunk of change!!!  Mortgage rates could easily get up to these levels again, so be prepared.  Click here to check out a mortgage calculator to make sure you will be ok when rates start to rise.
  2. Low interest rates are a gift to borrowers – so use it wisely!  The RBA would like you to take the money you save on your mortgage repayments and spend it.  A wiser idea might be to keep your repayments the same so you pay off your mortgage faster (provided you are comfortably making your repayments at current rates).  The latest rate cut reduces repayments by about $50 per month on a $300,000 mortgage.  This seems only small but it can cut years off your mortgage.  Click here to check out a calculator which shows what a difference a small increase in repayments can make over the life of your loan.
  3. Maybe it is time to consider fixing part or all of your home loan.  See my post next week on the pros and cons of such a strategy.
  4. Savers need to make their savings work harder.  If you are a saver, good returns are becoming harder to come by and it becomes more crucial to assess all your options and make sure you are getting the best possible rate for your savings.  Click here to check out my post on what to look out for when choosing an account.
  5. Savers don’t chase returns.  In a low interest rate environment, returns on savings are generally lower and the temptation to take on higher risk investments for greater return grows.  Be very sure you know what you are doing and that you are very comfortable with the increase in risk that comes from higher return investments.  For example, taking money out of cash (low risk) and putting it in shares (higher risk) is a big move up the investment risk spectrum.  Make sure you understand this is what you are doing and you are comfortable.   (Click here to see my post on understanding risk.)

Interest rates are one of the important levers that are used to steer our economy.  Everybody should pay attention to changes in rates as they impact the daily lives of every single one of us.  Interest rates affect whether we borrow, spend or save.  It impacts how easily we find it to get jobs, take holidays or sell our house.  It affects individuals and businesses and nearly every financial decision you make.  Where are rates going from here?  Only time will tell, but I suspect we have seen the last cut for the next few months.  How the economy performs from here will determine which way rates go next.

If you liked this post, you might also like:

How To Pay Off Your Mortgage Faster

10 Easy Ways To Save Money

How To Boost Your Superannuation Balance For Free!

Is Costco Membership Worth It?

* Please note this is for your general information only and does not constitute financial advice.  Please see a financial planner or accountant to get advice specific to your individual needs.

13/08/2013 3 comments
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Easy Ways To Save Money

Ok, here is a confession.  I am not very good at sticking to a strict budget.  For me, it’s like being on a soup diet, it is just not possible!  However, on my journey from being a spender to a saver I have learnt several tips that have helped my bank balance to grow.  Most of them are small things but the best part is that instead of being a chore or a punishment they have simply become a part of the way I live my life.

So today I would like to share them with you:

  1. I always write a shopping list and stick to it.  Supermarkets are the land of temptation.  They are deliberately designed that way.  Where and how each product is placed is planned to get you to spend more.  They call it the “theatre” of the shopping experience.  Have you ever wondered why the milk is always on the back wall of the store, furthest from the door?  It is so you have to walk through the whole store to get to this one essential item, hopefully picking up a few unintended purchases on the way.  I find a  shopping list helps to keep me focussed on the task at hand.
  2. At the supermarket, compare products on a per unit basis.  The shelf pricing sticker for each product shows how much the product is on a per unit basis (per 100g or per litre etc).  I sometimes find that the largest size does not represent the best value on a per unit basis, especially if the smaller version is on sale.  This method also gives you a common basis to assesses whether the branded good is worth it versus the “home” brand, without having to worry about different package sizes.
  3. I have a $100 single purchase spending limit.  This means that anything I want to buy that has a price tag of over $100 (you can pick the number that suits you), I have to wait until the next day to buy it.  Let’s just say it helps slow down my spending and gets me out of the shop environment where I can think more clearly.  It is surprising how many times I have decided with the clarity of time that I don’t need to go back and purchase something.
  4. Embrace the hand-me-down and buy second-hand!  I am so grateful to have a wonderful friend who has given me loads of hand-me-downs, anything from clothes to toys and bedding.  She gets great joy in seeing her children’s things having a second/third life and it has saved me a fortune.  I am continuing the tradition by handing Miss Money’s clothes etc on to someone else.
  5. Buy an Entertainment Book and use coupons when you can.  Ok I realise that it is a complete oxymoron to tell you to buy something to save money!  (Though I have tried using this argument on my husband!)  However, there are great savings to be had using this book of coupons and part of the proceeds raised from the sale of the book go help great causes such as hospitals and charities.  Back in our pre-children days, my husband and I used to be regular users of “fine dining” section of the book.  Now, it is all about the coupons at the back.  So far we have used the vouchers to get 25% off our local pizza, 25% of Adult entry to the zoo and buy one get one free ice cream.  It doesn’t take long for the savings to add up, even after accounting for the cost of the book.  If you are interested in checking it out click here.
  6. Hook into your local networks to find ways to entertain your children for free.  Check out your local council’s website for free activities for children, especially during the school holidays.  There are also websites such as Kid Size Living that tell you of free activities going on in your area.
  7. Turn off the lights and don’t leave electrical goods on standby.  It’s an oldie but a goodie and such a simple way to save money.
  8. Avoid fees where possible.  This includes things like fees for using another bank’s ATM, or fees for using your credit card.  I have an ATM finder app on my phone which directs me to the closest ATM for my bank.  I also do my best to avoid parking and all other fines as I see them as a big fat waste of money.
  9. Pay off your credit card.  Running a balance on your credit card and not paying it off every month is costing you cash.  Cut it up and pay it down.  Click here to see my tips on how to do so.
  10. Make your savings work harder.  Making sure you have the best account possible for your savings is another easy way to move towards your savings goals.  This means an account with low or no fees and the best interest rate possible for your timeframe/goals.  Great places to compare accounts include Canstar and Money Buddy.

I hope you found my tips useful!

If you liked this post you might also like to read:

How To Pay Off Your Mortgage Faster

5 Financial Tips You Need To Know Now You’re A Parent

How To Make Your Savings Work Harder

Is Costco Membership Worth It?

* Please note this is for your general information only and does not constitute financial advice.

02/08/2013 21 comments
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Top Tax Tips

No one likes tax time, well maybe except accountants (they love that sort of thing), so I have decided to put together my top tax tips to help you get through tax time as painlessly as possible.   Here goes:

(1)    My number one golden rule when it comes to tax is that if the Taxman owes me money, (think refund), I get my tax done as quickly as possible.  If it is likely that I owe the Taxman, for example I have made extra cash through saving or investments, I don’t submit my return until the 31st of October if I am doing it myself.  If you use a tax agent, you can push it out even further.  Most tax agents have an extension until the 31st of May, but confirm with your agent to be sure.

(2)    Consider using the ATO’s online tax preparation and lodgement service called e-tax.  It’s free and scarily enough, you can get a lot of your data prefilled in from the tax departments records.  This means that for a lot of things such as your income from your employer, centrelink payments and bank interest, you just have to check that it is correct.  It means that relatively simple returns are pretty easy to handle yourself and most refunds through e-tax are issued within 12 business days.  Check out their website at http://www.ato.gov.au/Individuals/Lodging-your-tax-return/E-tax/ to decide whether it is for you.

(3)    Make sure you are on top of what deductions you can claim.  The ATO outlines specific deductions for many occupations including nurses, hairdressers, teachers and even “Adult industry workers” so check out the fact sheets at http://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Deductions-for-specific-industries-and-occupations/ and make sure you are not missing out on any deductions.

(4)    The  ATO considers electronic records to be just as valid as paper ones.  This is true of both documents that were electronic to start with (for example receipts for online purchases) and documents which you have originally received in paper form. This means that you can now scan all your relevant paper receipts and throw away the original.  Just make sure you also keep an additional electronic back up :-).

(5)    Car usage is the biggest single deduction that you may be able to claim as an employee.  Travel to work is generally not allowable, but you can claim the cost of using the private motor vehicle if it is being used for work purposes such as travel between work locations visiting clients/customers etc.  If you want to make a claim the best way is to keep a log book to substantiate your claim.

(6)    If you have a flexible employer who allows you to work from home you may be able to claim this through your tax.  To cover expenses such as heating, cooling, lighting and depreciation of general office furniture, you can either claim your actual expenses (but you will need to keep a diary of those expenses and hours worked) or you can claim a fixed rate of 0.34c per hour worked.  If you use the fixed rate, you will need to keep a diary to record the amount of time you use your home office for work purposes.  Expenses such as stationary, telephone, internet and computers are claimed separately.

(7)    Make sure that any investments or savings you have are in the name of the spouse paying the lowest tax rate.  This is because dividends and interest are taxed at your marginal tax rate.  Watch out for investments in the names of your children as they may attract punitive tax rates as explained in my previous post “Three things you really need to know when saving and investing for your child”

(8)    Click here to see the latest marginal tax rates.  You can now earn $18,200 before you have to start paying any tax.

If you liked this post, you might also like:

How To Teach Your Child About Money

10 Easy Ways To Save Money

How To Pay Off Your Mortgage Faster

Top Tips For Getting Rid Of Your Credit Card Debt

 

*Please note this is for your general information only and does not constitute financial or tax advice.

17/07/2013 8 comments
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Costco

For quite a while I have been wanting to check out a Costco store.  They promise big savings but I find it hard to stomach the concept of paying a $60 yearly membership fee for the privilege of shopping at their store, without knowing whether the savings stack up.  After much consideration, I decided to take a leap of faith and sign up for a year to find out what all the fuss was about.  So I powered off down Parramatta Road, handed over my cash and added an extra card to my wallet.  But the big question is was it all worth it?

In a word, I think, yes.  But let’s start at the beginning first.  For those who haven’t been Costco it is true American shopping experience.  Everything is super sized!  In terms of the store itself, think Bunnings with food!

But it is not just food you can buy there.  They have everything from TVs, to beer, cubby houses, lounge chairs, clothes and you can even buy an $8000 watch if you feel so inclined!

Do you have a spare $8,000?

In terms of groceries in most areas the big brands are covered but like most of these things may not have the exact product or brand you are after.

Not only is the store super sized but everything you buy is huge too!  Butter comes in 1.5kg blocks, toilet paper in slabs of 60 rolls, you can’t buy one loaf of bread you have to buy two and even Nutella comes in packs of 2×1 kilo tubs!  Luckily, the trolleys are tank sized to help you cart your haul.  Needless to say good storage space is a must if you are going to be a regular Costco shopper.

Yummmm – but maybe somewhat oversized even for me!

So what about the savings?  Are they worth it?  I think yes.  I took a random sample of 10 pretty common household items from my regular shopping list and did a quick price comparison with my local big name store.  This was the results:

Product Costco Price Quantity Local Store Price Quantity Costco Unit Price Local Store Unit Price % Saving
OMO Top Load (5kg) $54.99 10 kg $30.00 5 kg $5.50 per kg $6.00 per kg 8.33%
Finish All In One Dish Washer Tabs $37.69 112 tabs $21 48 tabs $0.34 per tab $0.44 per tab 22.73%
Cottonelle Toliet Paper $25.38 60 rolls $15.99 24 rolls $0.42 per roll $0.66 per roll 36.36%
Colgate Total 360 Toothpaste $15.99 3 x 220g $2.94 1 x 110g $2.42 per 100g $2.67 per 100g 9.36%
Radox Oxygen Shower Gel $11.99 2x 1 litre $8.89 1 litre $0.60 per 100ml $0.89 per 100ml 32.58%
Heinz Big Red Tomato Sauce $7.79 2 x 1itre $3.96 1 litre $3.89 per litre $3.96 per litre 1.77%
Old El Paso Soft Taco Kit $9.29 785g $5.00 405g $1.18 per 100g $1.23 per 100g 4.07%
Pine O Clean Multipurpose Spray $8.59 3 x 500ml $2.99 1 x 500ml $0.57 per 100 ml $0.60 per 100ml 5.00%
Mortein Fast Knockdown $15.29 3 x 300g $6.77 300g $1.70 per 100g $2.26 per 100g 24.78%
Huggies Nappies Walker Girl $65.99 132 nappies $33 64 nappies $0.50 per nappy $0.52 per nappy 3.85%
Average Saving 14.88%
NB. Prices as per Thursday the 20th of June
NB. I used price per unit to measure the cost savings, given the difference in quantities between my local store and Costco

 

On every product, Costco performed better than my local store.  On some products the savings were substantially better than others, but I think an overall average saving of 15% makes the membership fee and 30 minute drive worth it for me.  I think the savings would have been even bigger, if I had included fresh meat or vegetables but we have a small family and do not have enough room in our fridge to freeze the excess.  For example, lean mince is substantially cheaper than my local store at $6.99 per kilo but I would have to buy 3 kilos at a time, rather than the 500g that I buy now.  If you have a big family then I think the savings over time should be worth it and I will be planning a trip to Costco for Miss Money’s 3rd birthday party supplies.

A word of warning though!  Costco is the land of temptation and you can walk out of there with things that you do not need.  Yes, I am talking from experience.  I will admit that on a whim, I brought a packet of 100 Chupa Chups.  I only have one child! What was I thinking?

Chupa Chup…anyone?

So, yes Costco I will be back.  Once a quarter or so, for household items, like toilet paper, tissues, cleaning products that have long storage lives, oh and maybe a couple more Chupa Chups 🙂

If you would like to read more from me in 2015 don’t forget to sign up to my weekly email using the form below:



If you liked this post you might also like to read:

How Much Can You Save Shopping At Aldi?

Home & Contents Insurance: How Do You Know If You Have Enough?

Winter Family Meals On A Budget

How To Pay Off Your Mortgage Faster

5 Websites That Will Help You Make Or Save Money

How To Save On Your Electricity Bill

(Please note this is not a paid post.  It was done out of my own curiosity.)

 

10/07/2013 47 comments
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Yesterday I posted an article which showed that women are better than investors than men, but knowing you have the potential to be a good investor is of no use, unless you know where to start.  So welcome to the Money Mummy school of investing!  Every Thursday I am going to publish a post which guides you through the key principles that you need to know when making your first investment decision.  Successful investing is not difficult and has nothing to do with luck.  There are a few fundamental ideas that you need to know which will greatly increase your chances of success and help you avoid disasters.  So let’s get started.

Before you invest a cent, there is one very important thing you must do and that is make sure your “financial house” is in order.  You must be very clear about how much debt you owe and what type of debt it is.  Generally speaking there are two types of debt, good and bad.  Good debt is debt used to purchase things that increase in value such as a home loan, investment property loan or a loan to purchase shares (more on this later).  These types of debt are classified as good because while you are paying interest on the loan, hopefully, the value of the asset purchased is increasing at a faster rate and you are financially better off.

Borrowing money to purchase things that fall in value is known as bad debt.  Borrowing to buy a car is a classic example of this.  It is widely reported that most new cars loose 30% of their value in the first year, so the asset is worth less than the value of the loan at the end of year one.  Credit card debt and personal loans for holidays are also generally considered bad debt.  Bad debts, particularly credit card debt, must be dealt with before beginning to invest as the interest charged on these cards of around 20%, far greater than the 10% average return for Australian share market (1983-2012).  In this case, the best use of your money is to pay off the cards using the strategies outlined in my post “Top Tips For Getting Rid of Your Credit Card Debt”.  This will give you nearly a 20% return on your money, risk free, it is difficult to get an investment return to beat that!

The next thing you need to do is make sure you have an emergency fund saved in cash.  Six months of after tax income should be saved to ensure that you have the confidence to deal with any bumps in the road that life might bring, a new baby, losing your job, those little things that life throws at all of us that would otherwise knock you off balance.  Yes, agreed with current low interest rates savings accounts are not sexy investments, but your money is safe and easy to access should you need it, which is the whole point of having an emergency fund.  For me the best way to save is to use direct debit.  This ensures the money is whisked away to a separate emergency fund account, before I have the chance to get my hands on it.  Shop around for the best rate you can and don’t be afraid to move should a better deal come along.  To help you compare the myriad of products out there some of my favourite comparison sites include:

http://www.canstar.com.au/savings-accounts/compare-online-saver/

http://mozo.com.au/savings-accounts

Once your financial house is in order, credit cards paid off and your emergency fund well under control, you are ready to move to the next step, understanding the crucial principles of risk and return, and figuring out where your own risk tolerance lies.  Understanding these principles will guide your investment strategy.  Many people forgot these basic principles during the financial crisis and paid a hefty price for it, next week I will explain why.  Stay tuned!

If you liked this post check out the rest of the series by clicking on the links below:

What Is My Risk Tolerance?

Risk and Return

What Are My Investment Choices?

Fixed Interest Investments

Property Investments

18/04/2013 2 comments
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The best time to start saving for your child is now.  Whether it be for their education, or to buy a car or a deposit for a house, having time on your side and a long term investment horizon will help you to your reach your goals.  However, there are three things you really need to know about when investing/saving for your child:

  1. Watch out for the taxman!

Investing directly in your child’s name is unlikely to be the most tax effective way of saving for your child.  This is due to tough penalty taxes for minors.  The Government has put this in place to stop parents funneling money into their children’s names to avoid tax.  The penalty tax is applied to “unearned income”, that is money the child has not worked for and includes income such as interest, share dividends and distributions from trusts.  If you invest under your child’s name, the first $417 of unearned income is tax free but after that tax is charged at 66%!  Any unearned income after $1,308 is taxed at 45%!  The upshot of all of this is that generally speaking, the parent with the lowest tax rate should invest on behalf of the child.

  1. Let compounding do the work for you!

Compounding is one of the best investment strategies of all time and the greatest part is anyone can use it.  The keys to getting compounding to work for you is to reinvest the earnings from your investment and invest for the long term (10 years plus).  This strategy can be used regardless of whether you choose to invest in managed funds, shares or a high interest bank account.  The best way to demonstrate how it works is to look at this simple example:

Scenario 1: You invest on behalf of your child at 10% per annum over 20 years and reinvest all returns

Year Start Value Interest End Value
1 $1,000 $100 $1,100
2 $1,100 $110 $1,210
3 $1,210 $121 $1,331
4 $1,331 $133 $1,464
5 $1,464 $146 $1,611
…….
15 $3,797 $380 $4,177
……
20 $6,116 $612 $6,728
Total interest earned $5,728

 

Scenario 2: You invest on behalf of your child at 10% per annum over twenty years and withdraw all returns.  At the end of the 20 year period you have earned $5,728 in total interest.  This is without making any extra contributions.

Year Start Value Interest End Value
1 $1,000 $100 $1,000
2 $1,000 $100 $1,000
3 $1,000 $100 $1,000
4 $1,000 $100 $1,000
5 $1,000 $100 $1,100
…….
15 $1,000 $100 $1,000
……
20 $1,000 $100 $1,000
Total interest earned $2,000

 

At the end of the period you would have made $2000 in total interest.

In these examples, simply reinvesting without making any extra contributions increases your return by  $3728 over twenty years.

Adding extra contributions, really makes the benefits of compounding take off.  For example, if you started with the same $1,000 invested at 10%, but contributed an additional $20 per month for the 20 years, the final investment would be worth $21,207.  Of that $21,207, $15,407 would be interest income a big step up from just sticking with the initial investment and earning only $5,728 in interest income!

  1. Be wary of education saving plans (ESP)

Education savings plans (ESP), sound attractive as they offer tax free investment for education.  However, like with all investment products it is very important to understand the full terms and conditions that apply to your investment.  For example, with the Australian Scholarships Group’s The Education Fund (TEF) there are very restrictive conditions on access to your investment and its earnings.  Under this plan, if your child decides not go on to higher education, you will only be refunded your initial contributions less fees and you will not receive any compounded investment earnings that would have been earned during the entire time you have been invested.  Also to get the maximum benefit, your child must study full-time for three years and satisfactorily complete each year of study, so if they choose a one or two year course you will miss out on the full benefit.  There are many more terms and conditions on this product so I cannot emphasize enough how important it is to read the full Product Disclosure Statement before making any investment decision on this product or any other.

Armed with these three important strategies I hope you are more informed to make good savings and investing decisions for your children.

If you would like to read more from me in 2015 don’t forget to sign up to my weekly email using the form below:



If you liked this post you might also like:

5 Financial Tips You Need To Know Now You’re a Parent

How To Teach Your Children About Money

10 Easy Ways To Save Money

How To Pay Off Your Mortgage Faster

* Please note this is general information only.  Please see your accountant or financial planner for specific advice suitable for your circumstances.

03/04/2013 19 comments
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