One problem that many people make is failing to understand two key principles of investing:

• The cost of inflation over time.
• The lost opportunity cost of returns from other investments.

Consider the historical costs of inflation since the beginning of the century. According to the BLS inflation calculator, if you held 1,000 USD in the stock market from 2000 to 2011 and didn’t make a return, you would see that the value of your money would have dropped to $765.54. If you were saving for retirement then that would be a tremendous cost to you. Therefore, you would want to make sure that you beat the 3% average rate of inflation over each year to stay ahead of the game.

Also, many investors are eager to invest in the stock market because it provides them the opportunity to make compounded returns on their investments. Although compounded returns can be a great thing, they can also work against you if you lose money.

Unlike investing in a CD or a IRA, you won’t receive a steady return on your stock investment. Although the historical average rate of return of the S&P 500 has been 9.61% over the last 25 years, you can’t depend on that return as you move closer to retirement. Other investments provide a fixed income, which makes planning for retirement and other major events much easier. The returns on the stock market may be higher historically, but the volatility limits their opportunity to take advantage of the power of compounded returns.

If you are going to be trying to save for retirement, you are going to need to grow your money substantially. If you are spending about $50,000 a year, then you would need about $1,000,000 a year to survive through retirement. That means you are going to need to take a strong growth perspective to meet your financial goals.

Stocks remain one of the best ways to grow your money as you near retirement, but you can’t be in denial of the perils they present. You should create a diversified portfolio that maximizes your chances of reaching your growth requirements so that you will be able to retire more easily.

One of the biggest costs in moving is one that many people don’t even consider beforehand: the risk of your valuables breaking and the cost of replacing them. When you are moving, you need to consider what you can do to reduce the likelihood that your products will be damaged.

One of the biggest suggestions that many people have made is considering hiring a professional moving company to help you move your products. Professional moving companies are much more experienced in transporting valuables and will be less likely to break anything than you or your friends. Therefore, if you have fragile valuables, then you may want to seriously consider working with a professional moving company to minimize the risk of anything being damaged. You are going to need to weigh the cost of working with a moving company versus the risks of any of your products getting broken.

You are also going to need to make sure that you have a list of the different utility providers before you move into your new place. You can get this information from your landlord. You will want to make sure you understand the costs associated with each provider in your area ahead of time. Of course, you are not always going to have a lot of options insofar as utility providers are concerned. However, you can still know what your options are before you are forced to commit to any of them.

You are also going to need to have a plan for setting up your new abode. When you move, you may need to leave some of the goods and services you have behind. This can be a great idea, but at the same time you are going to need to make sure that you are going to be able to set have all the amenities you are going to need to live comfortably when you get your new place setup. You are going to need to find some new places that are going to provide you with the things you need to get your place setup properly. Personally, I have found that some of the easiest ways to get things for cheap was to:

• Visit a thrift store
• Go on Craigslist
• Check out local charities

These may not always provide you with the types of products you are hoping for, but you will often be surprised.

Moving can present many challenges, especially if you are living on a tight budget. Fortunately, there are plenty of ways you can try to move without spending a ton of money.

One of the biggest problems that people make when they plan for retirement is expecting that they can live a very frugal life. Although this is possible, they don’t really appreciate how difficult it can be. Ironically, the reason many people don’t save for retirement now is that they believe they are unwilling to make concessions in their current lifestyles. How easy do they think it will be to make those changes once they have actually retired?

A retirement planner for Liberty Mutual once made a statement that really makes a lot of sense. He said that once you retire, you are going to be living twenty years of Saturdays. You have a lot of time on your hands when you retire and probably won’t want to spend 20 years looking at basic cable. Are you going to have children and grandchildren that you are going to want to visit? Are you going to want to continue to participate in local community activities? Chances are that you are going to want to plan a lot of different activities for yourself.

You are going to have a hard time enjoying your golden years if you don’t plan for them now. New studies have found that most people are going to need about three quarters of the money they are earning during their working years to live the life they want during retirement. Social Security and pension programs aren’t going to be able to cover that on their own.

Speaking of your pension, do you really know what it is going to pay you each month when you retire? Many employers boast of the pension plans they provide to employees. Although your employer may have an awesome pension plan, that doesn’t mean that you are going to be able to live off of it. Look at your pension plan and see what your guaranteed income is actually going to be. For most pension plans, you will retire making just enough to stay above the poverty line if you don’t put any extra money into them each month. If you are looking for security, you can consider putting extra into your pension plan so that you can actually make a more reasonable income when you are ready to leave your job.

The biggest and most common mistake that people make when they are planning for retirement is telling themselves that they have too many bills. This usually means that they are in denial of the fact that they have a spending problem. If you can barely make your obligations now, then how do you expect to make ends meet when you no longer have a job? You will want to go through your expenses and find out what you really do and don’t need to spend your money on each month. You are definitely going to be glad you did when you retire later.

Dealing with an audit can be downright terrifying. The last thing you want to do is worry about being fined or imprisoned because you failed to understand the process. Even if you have never violated any tax laws, that doesn’t mean you can’t be audited.

Although undergoing an audit can be scary, it doesn’t have to be the end of the world. You need to know what you are up against and be prepared.

The fact you are being audited doesn’t mean that the tax authorities necessarily believe that you have done anything wrong. There are a number of reasons why you could have been audited.

According to a resource from Lawfirms.com, there are several red flags that the IRS (and presumably other tax authorities around the world) look for:

• failing to meet deadlines and schedules
• failing to provide required documents
• getting a tax consultant to sign off on your forms when you have a history of problems
• reporting an individual’s income over $150,000

The last factor is something you don’t really have any control over. Even if you follow the rules properly, you may still get audited

Nevertheless, you need to understand that you are the one who has the burden of proving your case.

If you are going to face an audit, I personally strongly advocate you get counsel. The cost of losing a case against the federal government is too high to leave to chance. If you are going to fight it on your own you should definitely know what you are up against.

Even if you’ve hired an attorney, you should educate yourself on tax laws. Understanding tax laws will give you an idea of what kind of evidence you need to better help you in your defense.

The type of audit you face will depend on its level of seriousness. You may be audited by mail, requested to visit the local field office or a tax auditor may actually come to your house or place of business.

Before you proceed with an audit, you need to understand your rights. Those will vary by jurisdiction. In the United States, you have the right to ask for an explanation for why you are being audited. You also have the right to ask for an attorney and ask what consequences may arise from any course of action. Finally, you can file for additional deductions during an audit.

Matt Kepnes of Nomadic Matt just submitted a guest post to Get Rich Slowly recently. He stated that many people are under the impression that they do not have enough money to travel. Matt disagrees with this position and so do I. You can afford to travel if you exercise some financial discipline. This doesn’t just mean while you plan for your trip, but also while you are actually traveling. The last thing you want to do is to run out of money while traveling, so pay attention!

Matt gives a number of tips, most of which seem to suggest that the best course of action is to live like the locals. For example, when you travel to a foreign country, Matt argues that you can avoid taxis and private coaches. These are obviously great tips. Matt also states that you can rely on hitchhiking in many parts of the world. He states that it is safe in many areas. Although I agree with him on this point, I want to highlight a point of caution.

Always make sure you understand which parts of the world it is not safe to travel in this way. If you are traveling in an area where there is strong social unrest or high levels of organized crime, you should be much more careful. Many citizens from countries such as the UK or United States face very real risks of being kidnapped in certain parts of the world. Never place your physical well being above pinching pennies. Areas such as Australia and Central are certainly safe to travel in, just as Matt highlights in his post.

Saving money on food is obviously a big thing as well. Due to currency exchange rates, you can buy products very cheaply in certain parts of the world. Many goods and services are open for negotiation as well. However, that doesn’t mean that you should buy a 700 euro bottle of Bacardi that was imported from across the world. Matt gives a few great tips on saving money on food, such as buying dinner at lunch prices.

Also, water in many places around the world can certainly be a scarce resource. If you are going to be purchasing water, you should try to reuse your water bottles rather than buying more water every time you go out. Also, people are likely to eat out when they are traveling, but eating out a single night can cost half what it would to buy groceries for an entire week. I agree with a lot of Matt’s points here, but that doesn’t necessarily mean you can never eat out. Many places offer some great deals on food and if you take advantage of certain prices and save your leftovers, then you might be able to almost break even.

Traveling on a frugal budget is a necessity for many people. Be sure to plan your trip and budget accordingly before you travel.

There are a variety of reasons why people spend money on things they don’t actually need. Many people actually have a psychological addiction to spending. If you are finding that you are addicted to making purchases, you may find that you are going to need to need to find  way to break the cycle of spending that you get into doing on a daily basis. If you can go a day or two without making a single purchase, you will be able to gradually cut back on your spending and eventually break your spending addiction.

Jason at the Frugal Dad proposed a similar solution that he recently went on. He spent one Wednesday eating his typical breakfast with his family at home and didn’t visit Starbucks. He drank water at work and didn’t make a single purchase at the vending machine.

Jason made a major observation after assessing the different things that he wasn’t able to purchase that he would have liked. He noted that there were many different times in the day when most people spend money on things. Also, there are many ways where Jason, his family and some close people in their lives need to find ways to cut back on their spending. A frugal lifestyle can be achieved, but you literally need to take it one day at a time.

I think Jason came up with a great idea here. If you create a no-spending day for yourself, then you should make sure that you actually get something out of it. You aren’t looking to save a few dollars at the vending machines throughout the course of a single day. You are looking to better understand your spending habits so that you can make more long-term changes later on.

Marianne Olson is a United States citizen who has recently been charged with 34 counts of fraud related to a fake offering of Facebook stock shares. Olson allegedly used the fake shares to pay a contractor and other service providers for services she has recently purchased. The crazy woman even went so far as to give shares to her own daughter as a gift.

Although it is sad that people were gullible enough to fall for Olson’s scam, there are plenty of people out there who don’t know any better. The last thing you want to do is be one of the people who gets taken advantage of.

First of all, make sure you know when the actual dates are for any company issuing stock, either as an IPO or an ongoing venture. If the dates don’t correspond, then you should look into it. If someone is offering you shares before the company has even gone public yet, then you know you have encountered a scam.

Secondly, you need to look into the story and find it believable. Olson told her victims that she stumbled onto $1 million of Facebook stock. How did an obviously broke woman who was unable to pay any of service providers manage to get hold of $1 million in Facebook shares? Never accept a person’s word at face value like that, especially if they have a history of being as shady as this lady obviously was.

Most importantly, buying shares directly from someone else is never a good idea. You want to purchase shares from someone who can provide some obvious assurances that they are providing something legitimate. Even if the seller is honest, they may not be holding what they think they are. You should make any stock purchases through a certified broker or from the company itself. At the very least you will have some idea who you need to get in touch with if you find any discrepancies or problems.

You should also make sure to investigate any broker you work with carefully beforehand. They are going to need to be licensed, so check whatever regulator works in your jurisdiction. If you are purchasing stock from a broker who has lost his license, you are likely borrowing from someone who has done something he shouldn’t of in the past. Make sure you identify anyone involved in any scam and take the necessary steps to report them to the authorities. That may be the only way to protect people who are not as informed as you are.

According to J.D. Roth in a guest post on Get Rich Slowly, the people who generally have the easiest time getting through this kind of crisis are the ones who had little to start with in the beginning. These economic times are harder than anything most people have ever seen before in their lives. Although many people are still trying to keep up with the Joneses to some degree, they are not doing so the same degree.

Roth explains that she lost her job, got divorced and watched her car die within a short period of time. Although this was a hard time for her, she managed to move on. When her life finally turned for the better, many of the old luxuries were no longer as important to her. Her new life goal was preserving her security and paying off her existing debts.

As people face financial burdens, they are able to reassess what they really need in their lives. If you are suddenly unemployed or have $20,000 in credit card debt, you need to be much more frugal. Although cutting back on your lifestyle expectations isn’t going to be easy at first, you will find that it won’t be as bad over time. Eventually, it may be more of a lifestyle.

Throughout life, you sometimes need to take a couple steps backwards before you can move forward. In order to move forward, you will need to change your frame of mind.

My great aunt survived the Great Depression. She had to completely reassess the way she lived her life and spent her entire adulthood living a very frugal lifestyle. She died with almost $1 million to her name. Despite the wealth she had acquired over her life, she never broke her frugal lifestyle. She learned to find contentment and peace in her life without spending a great deal of money.

How frugal you can be depends on your life situation. If you have a family, you are going to have to spend more than other people. However, regardless of what your life position is, you can find a way to cut your spending and live a modest lifestyle without being overly burdened. Plenty of your friends may still feel the need to buy the newest iPhone or best car to keep up with everyone else. Let them. You need to consider your own life situation and do what you need to live a happy life in the long-term.

Getting a summer job is one of the most important things that young people can do to get transitioned into the workforce. So many students struggle to find gainful employment after finishing school. Many employers state that the reason is due largely to many employees lacking significant work experience.

Although the work force is clearly struggling, there are a variety of ways that teenagers can get their first taste of working life.

Caretaker

One way that high school students can gain experience and become accustomed to the working life is by working as a caretaker. This can entail working as a babysitter or camp counselor. Additionally, many workers get their work as a lifeguard.

When students take a position in this capacity, they are demonstrating that they can deliver on an ability to take care of other people and handle the responsibilities that entails. However, working for a real employer will likely have more of a benefit than working as a babysitter for a private provider.

Remember, you aren’t just looking for a way to make a few bucks over the summer. Ideally, you would gain substantial experience that is going to be invaluable to you as you start your future career.

Tutor

Working as a tutor is a good way to showcase your skills in a field that you understand well. Before you work as a tutor, make sure that you can demonstrate that you have a strong understanding of the subject matter at hand. This will help you get better references and earn more money in the long-term.

Working as a tutor can be a great way to get your foot in the door if you want to work in the education profession. Make sure you keep track of your students and what progress you’ve mode as you help them improve their competencies in the areas you are tutoring them in.

Internship

Working as an intern is becoming an essential way to get work experience in your field. More and more businesses are looking for graduates who have served in internships in the fields they are looking to work in. Although it is more important for college students who are ready to get integrated into their fields, getting some experience in high school is also a good way to get into the industry early. You can then get more advanced internships in college, which will help you transition into a more professional level once you’ve graduated.

If you are a current high school student, you should try to gain work experience right away so that you can get integrated into the work force. In the long run, this will help you become accustomed to the work environment.

Consider doing the following when you are deciding to get your drink on.

Saving Money When Going Out to Drink

Going to the local pub or winery is going to be a lot more expensive than buying alcohol at home. Nevertheless, many people are looking for the social experience and are willing to pay the premium. There’s nothing wrong with that, but you should consider what you are going to do to save as much as you can.

First of all, you should consider going to a happy hour or another event where alcohol is likely to be discounted. Check with the local bars to find out when they are offering happy hours. You can save a couple dollars on a single drink. Those aren’t the kind of discounts you can afford to ignore.

You may also want to consider pregaming. Here in the United States, that is a term we use when we decide to drink before going out. You still get to have the social experience in the bar scene, but you will have satisfied much of your appetite for alcohol at that point. However, please make sure that you have someone who can drive you over there. Risking getting arrested, fined, injured or hurting someone else is not worth saving some money on alcohol. Always have a designated driver or do your pregaming at a friend’s house who lives within walking distance of the bar.

Another thing to think about is how much you intend to drink. If you realize that you drink more than you probably should, then you may want to seriously consider cutting back a bit. Drinking too much is not only unhealthy, but it will also burn a hole in your wallet over time. If you have a difficult time being at the bar without drinking, then you may want to consider buying a non-alcoholic version of a drink (also called a mocktail), such as a virgin Mary. These drinks are going to cost a lot less and won’t cause as much trauma to your liver.

Of course, you don’t have to eliminate all alcohol from your diet. You obviously went to the bar to drink, but you should still try to practice some degree of moderation.

A tight budget doesn’t mean that you have to give up going out to drink. However, you should always consider your lifestyle position and adjust your budget accordingly.