When you increase the amount saved by 20% per year, your overall increase is 20%. This seems to make sense and be "fair." But if you increase your return rate by only 12.5%, you get a 20.3% increase in the total, a much better result. Yet when you save for an additional five years, a 16.7% increase in time, you get a much, much better return — an increase of 46.9% total.

In other words, the amount of time you save has the biggest impact on your total return by far.

So what does this mean? For younger people, it means they should save as much as they can as early as they can. Someone in their 20's still has a great many years ahead of them. The best thing they can do to influence the amount of money they earn throughout their lifetimes is to save and invest as much of it as they can right now. Starting immediately and keeping at it for 30 or 35 years will give their investments a tremendous boost.

For those of us who are older, it means we need to start saving now. Even though we have less time, the more time we have our money working, the better total return we can expect. The old saying certainly holds true in this case: "The best time to plant a tree is twenty five years ago. The next best time is today."

And for you over-achievers, if you increase all three factors (something we all really should be trying to do), you get a marvelous result:

If you do all three — increase the rate, increase savings, AND increase time — you really get a huge impact. The amount at the end of the 35 years grows to 129% more than the initial scenario.

The Best Way to Maximize Your Investment Return [Free Money Finance]

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— FREE MONEY FINANCE (Photo: Newton Free Library)

Our advice? Learn all you can about personal finances so you can manage most of your money yourself. And if you eventually need help, be sure to take the right steps to hire a good financial planner that's qualified, trustworthy, and fits your personality so you can work with her.

10 Things Financial Planners Won't Tell You [Smart Money]

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* Visit on weekdays
* Buy online
* Stick to one park
* Arrive late in the day
* Clip coupons
* Get a season pass
* Check your wallet (Employers, banks, professional organizations and clubs may offer discounts or specially-priced tickets.)

Better yet, if you're looking to save some really big money, you can follow three simple tips: go at an off-peak time, be flexible (in time, travel arrangements, etc.), and shop around.

Sure, hitting an amusement park is great fun. But hitting an amusement park while saving money is an absolute blast!

Oh, and be sure to put it all your vacation charges on your cash back credit card (as long as you can pay it off right away.) Doing so will earn you a good 2% back on your spending. For a $2,000 vacation, that's $40. Not bad at all.

7 Ways to Save at an Amusement Park [Smart Money]

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* Changing your car's oil every 3,000 miles.
* Taking the brand-name prescription drug instead of the generic.
* Getting an annual furnace checkup.
* Hiring a lawyer to draw up your will.
* Investing in a mutual fund with a sales load instead of a no-load fund.
* Joining a warehouse club.
* Buying an extended warranty for your car.
* Getting accidental death insurance.
* Buying premium gasoline when your owner's manual says regular is fine.
* Buying renter's insurance for your apartment.

So, how skilled are you at knowing if a transaction is worth the cost or not? It appears most people are savvy on these ten as of this writing the most common result is eight out of ten correct. Take the test yourself and let us know your score.

Is It Worth It? [Kiplinger]

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My Money Blog raises this issue when he highlights quotes from the latest Warren Buffett book. Specifically, he notes how Charlie Munger, Buffett's right-hand-man, took an hour each day and worked on side projects. Eventually this time and effort built up until Munger had developed a very profitable business and found himself a rich man. Here's a quote that summarizes his rationale for taking time for himself:

Charlie, as a very young lawyer, was probably getting $20 an hour. He thought to himself, ‘Who's my most valuable client?' And he decided it was himself. So he decided to sell himself an hour each day. He did it early in the morning, working on these construction projects and real estate deals. Everybody should do this, be the client, and then work for other people, too, and sell yourself an hour a day.

Just think what we could all do if we took some time each day and set it aside to write that book, develop our hobby into something profitable, or work on that one idea we've had for the past five years. Over a long period of time, the impact to our personal finances could be quite dramatic.

It's an issue worth considering. What would you do if you took an hour (or maybe even less, as long as it was consistent) and worked on improving your finances? What would the results be five, ten, and twenty years from now?

Buffett on Charlie Munger: Work For Yourself An Hour Each Day [My Money Blog]

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And not only a small, save-a-bit sort of sale, but potentially a huge, save-thousands-of-dollars sale. Of course there are no guarantees that the savings will be gigantic (Circuit City didn't really show us the price love, now did they?), but all the elements are in place. Throw in the tax incentives for buying a new vehicle we could be in car-buying bonanza land. And there's no need to worry about buying such a car, since the warranty from the company will still be valid.

Hold on a minute. There's one thing that's nagging us a bit: buying a car from a company that's on the verge of going out of business. Sure, they'll give you a warranty on the car now, but what happens in two years when the companies potentially no longer exist? Thinking about it that way makes a great deal a bit more risky and maybe no as much of a "value".

Of course it's a balance between savings and risk. If the discounts become really steep, it may be worth the risk to get a new GM or Chrysler. But if the savings are only a few hundred dollars, or even a couple thousand, we'll pass this time around.

Dealership Closings: Bad for Them, Good for You [MainStreet]

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— FREE MONEY FINANCE (Photo: frankieleon)

"Do what you love and the money will follow."

We're willing to bet you have an opinion on this topic, so let us have it. True or not true: if you do what you love, the money will follow?

If You Do What You Love, Will the Money Follow? [Free Money Finance]

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* Don't Be Complacent. Continue to save money and make career moves to make your job or business more secure.
* Continue to invest in the stock market. If you are under 55, investing in the stock market right now could help you recoup your losses and gain big if the market goes back to levels it hit last summer.
* Look at real estate investing. It's no secret that there are huge discounts on real estate right now.
* Reflect on what you did right. Always remember the good decisions you made in the past, so you can replicate them in the future.
* Give To Others. Is there someone who needs help in your church, neighborhood, or at work?

We particularly like the last one. For those of you who aren't struggling, we think it's a good idea to help others — either with your time or your finances. We're sure you know someone who needs a bit of assistance and would be so thankful for your kindness.

Five Money Tips For People Not Struggling During The Recession [Money Crashers]

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1. Never ever let the salesperson take over your shopping experience when you're buying expensive items, or when the store offers a certain discount. You must control the bargaining process.

2. Know that the posted price for a big ticket item can be brought down. This is especially the case now, in these difficult times.

3. Never ever let them know that you really want something.

4. Force yourself to leave if the merchant doesn't give you a lower price.

5. Remember, you are the client, you have money in your checking account which the seller desperately wants.

People do this in foreign countries all the time. In many, it's a way of life, it's expected. In the U.S., not so much. People are embarrassed to ask for a discount. They think it's tacky. They make up all sorts of excuses why it shouldn't even be tried (like "that store will never give me a discount.") As a result, many Americans end up spending more than they could on a wide variety of purchases.

Good tips that can be applied to almost anything you'd like to buy — cars, TVs, computers, lawn service, and on and on.
And for those of you still squeamish about asking for a discount, remember that there are six times it's easy (almost a no-brainer) to ask for a discount. Almost anyone can save money in these circumstances.

So get out there and ask for a discount. As the saying goes, the worst thing that could happen is that they say "no". But if you ask in the right way, with the right strategy, and in the right circumstances, it's more than likely you will get a "yes" and leave the transaction with a bit more money in your pocket.

Do You Haggle? How To Negotiate A Price [The Digerati Life]

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Take the current average cost of attending four years at a public university: roughly $60,000. Save $20,000 before your child begins college by putting aside $50 a month starting at birth and assuming a 6 percent annual return. Then, pay $20,000 out of current income while the student is in college. Finally, have your child take out $20,000 in federal student loans over four years. The $200 monthly payments afterward are not a horrible burden for people in their 20s to bear, and they'll be debt free once the 10-year payback period is over.

This seems like a reasonable and workable approach, though maybe they should have called it "1/3-1/3-1/3" for the three equal shares you hope to use to pay the total cost.

And for those of you that don't like one of the thirds (or haven't yet saved anything and are close to college than 18 years), you can "simply" eliminate or reduce that third by putting more into the other two options.

18 Years in the Making [New York Times]

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* Get in touch with the work you would really enjoy.
* Communicate with those around you.
* Identify the places where you could cut spending in your life.
* Build up an emergency fund.
* Set a "target date."

While considering the issues surrounding this topic — hating our jobs, working just for the money, being trapped in a job because of financial pressures or needs, etc. — we started wondering just how many people really dislike their jobs but feel they are "stuck" in them due to lifestyle or other reasons. Leave your thoughts in the comments below — should be a very interesting discussion.

Weekday Misery, Weekend Pleasure [The Simple Dollar]

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* The 11 Most Overlooked Tax Deductions — There's no need to pay more taxes than you owe, and this piece will help identify deductions often overlooked. We even found one that could save us some nice coin.

* 5 Hidden Tax Breaks for Homeowners — At least there's some good news on the housing front — being an owner gets you several tax breaks. We especially like the "energy efficient home improvements" tax credits. If you didn't take advantage of them in 2008, you now have another year to do so. And 2009's options are much broader thanks to the recent government stimulus. New windows, anyone?

* 10 Things the IRS Won't Tell You — The most pertinent for those of you still waiting to do your taxes is #8: "April 15 isn't necessarily a hard deadline." Really? Yep. But you still need to file if you want to go past the 15th. One simple form will get an extra six months for those ultra-procrastinators out there.

So, now that we've covered paying our taxes, isn't it about time to discuss the more fun topic of what to do with the refunds we receive?

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...discussing many of the difficulties in financial dialogue one generation up and one generation down. With the parents, you're usually discussing how much money they have, if they can make it in retirement, what their estate plans are, etc. Tough stuff since the kids usually don't want to "meddle" and mom and dad can feel put on the spot.

With kids, the conversation is different, though can be as challenging. After all, how do you explain that a rough economy is having financial impact on your family to kids that really can't understand it? (Especially when you can't understand much of it yourself.) It's certainly difficult.

So we thought we'd ask you — which is the more difficult discussion: talking to mom and dad about how well they've prepared financially for the end of their lives or explaining to the kids that they have to forgo camp/a new iPod/vacation because some banks made bad loans/investments across the world?

— FREE MONEY FINANCE (Photo: Remy Sharp)

— FREE MONEY FINANCE (Photo: frankieleon)

* Even using one card, a 2% total return should be the minimum you receive back (versus the 1% that many cards tout as "standard".)
* Which card is best for you personally depends on how much you charge, where you charge, and when you charge.
* To make cash back cards work financially, you have to follow the other rules for good credit card management — no annual fee, pay off card every month, only buy stuff in your budget, etc.
* There are other factors you need to consider other than earning the most money. For instance, convenience.

I looked mainly at three cards in particular. Here's what's best depending on your circumstance:

* Chase Freedom — Much of your spending is concentrated in a few of Chase's 15 bonus (3%) categories (again, assuming you already have one of these cards and can get the 3%.)
* Blue Cash from American Express — You charge a lot each year (at least $15k, but more is better) and most of the charges are in the gas, grocery, and drugstore categories and occur later in the year (once you've gotten to the level-two rewards.)
* Schwab Bank Invest First Visa Signature — Most of your spending is not in any of the Chase or Amex Blue bonus categories and/or you want the simplicity of knowing you're getting a certain percentage back (2%) no matter what you charge or where.

Watch for the bait and switch. For instance, the Chase Freedom card recently lowered its rewards for new accounts. Instead of the once solid 3% cash back on certain transactions, 1% is the new norm. I go into my findings in more depth in the "The Best Cash Back Credit Card" on my blog Free Money Finance.

— FREE MONEY FINANCE (Photo: frankieleon)

— FREE MONEY FINANCE (Photo: the queen of subtle)

Ouch. Ok, so some of these are probably people that are earning just enough just to get by, with little to save at all. But even accounting for this, there are still significant numbers who simply didn't plan for the future, didn't sock away extra money, didn't think they needed savings. Or conversely, they simply spent all they had without a care for the future. And now that the future has turned very ugly, they are in deep trouble if a job loss comes their way.

Just as frugality and saving money is making a comeback in popularity because of the economy, let the above fact also bring back the wisdom of having an emergency fund — three to six months (and some would say more in this sort of economy) of living expenses to get you through a tough time in case of job loss or substantial unexpected expense.

Half of Americans Are Two Paychecks Away from Hardship [US News]

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There may be a positive byproduct of our troubled times: a decrease in the urge to complain. People who still have jobs are finding reasons to be appreciative. (It feels unseemly to complain about not getting a raise when your neighbor is unemployed.) Homeowners are unhappy that home values have fallen, but it's a relief to avoid foreclosure. And yes, our portfolios have plummeted, but most of us can say that at least we didn't invest with Bernie Madoff.

Ok, so maybe you're having trouble seeing any sort of silver lining in the current economy. Perhaps these two thoughts will spur a bit of gratitude:

* Maybe whatever bad news you're dealing with is actually a blessing in disguise. You wouldn't be the first person to start an ultimately successful career, business, investment, etc. in times of despair.
* You don't have a job that stinks — at least as much as these jobs do. After all, can your crappy job really be much worse than being an animal semen collector, an odor judge, or a lift-pump remover? We think not.

So consider this our attempt at looking on the bright side of things. That's what we're going to do. At least until the next economic report comes out...

From Attitude to Gratitude: This Is No Time for Complaints [Wall Street Journal]

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1. Look through the entire book.
2. Record the offers you like. [Including] free or very low offers, no-brainer offers, offers to places you frequent often, price-matching offers and places you may want to try out.
3. Take extra steps to really maximize the use of the Entertainment Book. [Such as] plan around the book, look through the book before any trip/purchase and take the book with you when you're out.

He's saved $29 so far and thinks he can save $200 in a year. Maybe, maybe not. Time will tell.

What's your take on the Entertainment Book? Worth the cost or just another rip-off fundraising vehicle?

How to Save Money Using an Entertainment Book [Free Money Finance]

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We've all heard the tips on bringing your lunch to work, drinking water when eating out, and so on, but what about some new ways to save money? Well, MSN Money isn't coming to our rescue, but they do bring up one interesting concept that's relatively new (at least to the point that so many are now talking about it) — the idea of saving money by spending some first. MSN gives the following example:

Harrison's Costco membership got her a cheaper auto insurance policy (with free roadside assistance). That cut her annual car expenses by about $300.

The issue of saving money by paying for a Costco (or any warehouse club for that matter) membership has been discussed quite often lately as others have detailed savings in gasoline and food, noting that the money saved in these two categories alone may be worth the cost of membership.

The "save money by spending money" movement has other supporters as well. Ramit from I Will Teach You to be Rich is a proponent of spending so you can save as is Yahoo, who lists zoos, aquariums, AARP, Warehouse Clubs, AAA, and amusement parks as places to save by buying memberships. In particular, Yahoo says the following about warehouse clubs:

There are a few items [that are] always cheaper at warehouse clubs — namely, milk, eggs, butter and cheese," says Mary Hunt, publisher of money management site Debt-Proof Living. These staples are regularly priced at least 20% lower than at your local supermarket, she says. "But understand that shopping at the warehouse club is like a minefield," warns Hunt. To truly make your membership worth the cost, you'll need to separate the great deals from the bad ones. Bring your supermarket circular with you when you shop to compare prices and ensure you're really saving.

So here's our question for you: are there any ways you spend money to (eventually) save money?

How 4 are saving $17,860 a year [MSN Money]

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1. Don't ask "how's the job hunt?"
2. Ask about extracurriculars.
3. Ask about health insurance.
4. Talk about industry news.
5. Offer up one good contact.
6. Acknowledge trouble with the significant other.
7. Don't be shy about gratitude.

Personally, our inclination has always been to ask, "What can I do to help?" Maybe that's too simple of a response in today's over-complicated world.

What are your suggestions for being a supporter of a close friend who's out of work?

How to talk to a friend who's been laid off [Brazen Careerist]

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* Take time off. If you both have some vacation time built up, put in for a day off and spend it together.
* Make an elegant homecooked meal instead of hitting the town.
* Give a thoughtful gift. It's easy to just buy jewelry or chocolates for Valentine's Day, but it means more (and is less expensive) if you find a gift that truly has the recipient in mind.
* Write a note expressing how you feel to go with that gift. A little sentimental note means a lot more than some extravagance.
* Make a mix tape. Simply make a compilation CD of all of the songs that either mean something with regards to your relationship or express in some way the way you feel about your partner.
* Volunteer. If you're both socially conscious (and also adding in the fact that Valentine's Day is on a Saturday this year), why not spend the day involved with a volunteer project together instead of doing the typical date thing?

One central theme among all these ideas: it's often not the amount spent (for some people it is, but probably not the majority), but the heartfelt expression of love that means the most. So open your mind and be creative. There are tons of ways to say "I love you" without spending a bundle, and many of these meaningful gifts are the presents that will be remembered most in years to come.

Some Thoughts on Celebrating Valentine's Day [The Simple Dollar]

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