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About the Author

Katie Dunsworth

Books by this Author
The Smart Cookies' Guide to Couples and Money

The Smart Cookies' Guide to Couples and Money

Earn More, Argue Less, Achieve the Life You Want . . . Together
edition:Hardcover
also available: Paperback
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Excerpt

Chapter One
The Other “M” Word
Why Money Is So Hard to Talk About
 
Admit it. It’s been on your mind since you realized you might be falling in love, even if you wouldn’t dare say it out loud: Is he (or she) in good financial shape? Will we be able to build a future together? Forget about marriage, money is the real “M” word.
 
No matter how often we tell ourselves that money doesn’t matter when we’re in love, we know it does. Love can bring us joy and companionship. But as the Motown song made famous by the Beatles goes, “Your loving gives me such a thrill, but your loving don’t pay my bill[s]!” To actually build a life together as a couple, you need more than love. You need a financial plan.
 
But here’s the good news: Being in a long-term relationship can be as good for your wallet as it is for your heart. With a plan in place, you have the potential to achieve your financial goals a lot sooner as a couple than you could on your own.
 
Pool your savings, for example, and you can buy a home much sooner than with only one income — not to mention a bigger one. Together, you may also be able to qualify for lower mortgage rates or interest rates on a car or bank loan, saving you thousands of dollars in interest. And by combining your savings into one account, you are more likely to meet the high minimum balance required to qualify for some of the best-yielding money market accounts.
 
You can cut costs in other ways, too. How about a date night in? Cook something yummy for dinner or share some cheap takeout and snuggle on the couch with a movie — it can be just as enjoyable as an evening out, and a lot less expensive! All of this translates into more money for both of you. If you and your partner already live together, you know that you can also dramatically cut your expenses by splitting the rent or mortgage and the bills, and maybe even by selling one of your cars and sharing the other. Katie and her husband, Nick, have done both, and saved thousands of dollars in the process.
 
Being part of a couple can also mean you’ve got another source of financial support if you need some short-term help, and someone who won’t charge you interest on a loan. (At least, we hope not!) And over time, your incomes are likely to fluctuate and there will be periods when one of you has to lean on the other. Being able to do that can actually help you reach your goals even faster than you could on your own. Robyn helped her former husband out financially when he went back to school, and then he returned the favour when she started a graduate degree program and cut down her shifts at work. With his help, she was able to take additional classes and get her degree much sooner than she would have otherwise. That also meant that she was able to increase her income faster, now that she qualified for higher-paying jobs with the additional degree.
 
When Angela and a former boyfriend moved in together and decided to combine their finances, he had double the debt that she did from school. Nonetheless, they consolidated their balances and worked together to pay the debt off faster. Then, when she graduated and took a freelance position that offered her the chance to hone her skills but without a steady paycheque, he helped support her financially between projects so she could get the experience she needed to land a more stable, better-paying job.
 
There are less tangible advantages to being in a committed relationship, too: It often forces you to take a hard look at your own financial habits. When you know that your actions affect your partner, too, you’re more likely to pay attention to what you’re doing with your money. And you’ve got extra motivation to set aside money for future goals if you know your partner is doing the same.
 
When Sandra and her boyfriend, Jason, began dating, they often surprised each other with gifts and extravagant dates: tickets to a hockey playoff game or a concert, or a day of spa treatments. For a while, Sandra didn’t worry about how much they were spending on each other, since she enjoyed spoiling her boyfriend and he was happy to return the favour. Plus, they were both making good money, and neither was depending on a credit card. But as they became more serious, Sandra began to worry that they wouldn’t be able to keep up those kinds of splurges without dipping into their savings. By this point, they’d talked about their future together and she knew that if they spent too much now, they would pay for it later. So when they started talking about taking a trip to Hawaii, she saw it as an opportunity for both of them to rein in their spending a little. Sandra calculated how much it would cost and then they discussed how much they’d each have to set aside if they wanted to take the trip within the next six months. Once they had a tangible goal and put it in perspective, they knew that in order to save enough money they’d have to start eating in more often, plan less expensive outings together, and skip some of their habitual Starbucks runs. But each of them thought it was worth the trade-off. All it took was a little incentive, and in the end it helped both of them get into the habit of saving money each month for their future goals.
 
These kinds of behavioural changes that happen when you’re in a serious relationship may help to explain why those who are married tend to increase their personal wealth at a much faster rate than those who are single. One 15-year study by Ohio State University (published in the Journal of Sociology in 2005) found that those who stay married are able to accumulate nearly double the wealth of those who remain single. The study’s author, research scientist Jay Zagorsky, attributed the difference to the benefits couples get by splitting expenses and combining their savings, as well as the new attitude many of them develop about money. He noted that the realization among married participants that their actions now had consequences for at least one other person — and maybe children, too — prompted many to adopt better financial habits and put more money away rather than spend it.
 
The U.S. census, which also tracks wealth, seems to support these findings. They found that the average net worth of all households headed by married couples is nearly $102,000, while single men have an average net worth of $23,700 and single women have an average net worth of just $20,217. In this case, if you split the total net worth in half for married couples, each spouse has a net worth that’s more than double that of their single counterparts. That’s a big difference.
 
The Canadian census tracks earnings, not net worth. But it found that childless couples have an average combined income of $59,834, while couples with kids earn nearly $83,000 combined. Meanwhile, the average income for singles living on their own is just $24,808. Even if you divide the income in half for couples with at least one kid at home, that means each partner is still making nearly 68 percent more on average than their single counterparts. True, age may be a factor here: More singles are in their 20s or 30s, so their earnings won’t be as high as those who are more established in their careers — but that’s not enough to account for the whole difference. It’s likely that being in a committed relationship, especially if you have a family to support, can also provide a powerful impetus to work harder, or to seek a better-paying job or additional sources of income.
 
Of course, if you want to enjoy all the financial advantages of being part of a couple, you need to keep an open line of communication about money and always work together to plan your financial future. Once you know exactly how much you need to earn or save to reach your goals, you’ll be more motivated to earn enough to stay on track — especially if you know your partner is doing his or her part. (We’ll give you some ideas on easy ways to earn extra income in Chapter Six.) Which is one of the reasons why we don’t just want to help you identify your goals, but encourage you to put a price tag on them as soon as possible so you know exactly what you need to achieve them.
 
Working through your finances as a couple and planning your future together won’t just improve your finances: It can actually improve your relationship, too. Working together to achieve the things that you both want can be a fun process, once you’re both on the same page. Katie and her husband say they’ve actually come to look forward to their monthly “money dates,” a time they set aside to talk about investment ideas, monitor the progress they’ve made towards their financial goals, celebrate their successes, and help each other tackle any challenges that have come up. Talking about money has become so habitual that the once-taboo topic often drifts into their daily discussions too, whether they’re sharing news on a deal they got that day or discussing the pros and cons of an investing tip or strategy they read about in the financial news.
 
Still, that doesn’t mean that bringing up the topic the first time is easy. Even Katie admits that getting to that level of comfort took a lot of practice and there were some uncomfortable, even emotional, conversations over money in the beginning of their relationship. Maybe that’s why so many of us try to avoid the topic for so long. Sure, we’ll talk with each other about the things we want in life. But we often put off discussing the one thing we need in order to have them: money. We manage to talk about how we’ll split the bills for the wedding or the utilities and rent, but dance around the bigger questions of how we’ll merge our money or save enough for the life we each envision. Too often, we just assume that piece will fall right into place on its own: As challenges come up, we figure, we’ll deal with them then. If we get along well, we should have no problem sorting out the financial stuff down the road, right?
 
Maybe not. Beneath the surface, you could each have wildly different expectations about how much money you need to live the life you want — and you’re not likely to know unless you talk about it. Yes, you can still find a compromise that works for both of you. But to do so, you need to know how each of you envisions your life together, how you’ll pay for it, and who’s responsible for what. Ideally, you should have that discussion well before you walk down the aisle or co-sign a lease on an apartment together. But if you haven’t, you’re certainly not alone.
 
 
Money Talks
A poll conducted for the Bank of Montreal in 2008 ranked money as the most sensitive topic of conversation among Canadians — ahead of religion, politics, and even weight. So it shouldn’t be a surprise that in the U.K., the Financial Services Authority found nearly three-quarters of couples have a tough time talking about money: One-third of the nearly 1,500 people it surveyed said they’d rather discuss sex or a previous relationship with their boyfriend or partner.
 
The bottom line is if you don’t talk about your financial concerns and expectations with your partner there is a good chance that any assumptions you have made could turn out to be wrong. You might believe that the man you’re with is financially successful because he has a hip wardrobe and almost always picks up the tab when you go out, for example, or simply because he works in a high-paying industry (even though you may have no idea what he’s actually earning). You might think that since he rarely uses a credit card around you, he’s got little or no debt. And when he talks about wanting to start a family, you’re sure that means he’s got money saved up. Unless there are obvious signs indicating otherwise — maybe you overhear a call from a collection agency or you’re there when the landlord shows up to demand overdue rent — it’s easy to assume that your boyfriend, or partner, will be able to contribute at least as much as you are financially to the relationship, if not more, right?
 
So you put off the money conversation until you’re absolutely forced to have it. Maybe one of you loses a job and the other is stuck covering the bills because you don’t have savings. Maybe you decide to buy a home together, only to discover that your partner’s credit score is so low that you can’t get a mortgage. Or you get pregnant and all of a sudden have to figure out how you’re going to cover all the additional day-to-day expenses of having a baby — not to mention, child care or the bigger place you might need to accommodate a child. Of course, this is not the best time to realize that you and your partner are not on the same page financially. By then it could be too late, and you may find that both your finances and your relationship are in serious trouble.
 
We know this from experience. Each of the five of us can recall a relationship in which we put off talking about our finances and made assumptions that turned out to be wrong — and regretted doing so. From varying expectations about who was responsible for what, to different approaches regarding making and managing money to coping with opposing financial priorities, we know how bad it can get. Had we discussed these issues with our partners sooner, we might have been able to reach a compromise we were both happy with. But the longer we waited, the harder it was to bridge the disparity in our habits and attitudes.
 
It may seem hard to believe that couples who are close in every other regard can be so vastly different when it comes to money, but researchers say it’s more common than you might think — even among married couples. One study published in the Journal of Socio-Economics found that spouses disagreed on everything from how much income and wealth they had to how much debt they carried. “Most husbands and wives do not share similar views of the family’s finances,” the research scientist concluded. Even worse, they often didn’t realize it, which means they might assume their finances are in better shape than they actually are and behave accordingly. That’s not good for their relationship or their finances.
 
When it comes to what’s important to each person financially, couples don’t score much better. In a 2006 Money magazine survey of 1,000 spouses, about a quarter of the men surveyed said they thought their wives believed that having the right investments was very important. The actual number was nearly twice that. Likewise, only 45 percent of men said that having cash stashed for emergencies was very important to their wives but, in fact, more than two-thirds of the wives said it was crucial. Meanwhile, women believed their husbands cared more about paying off debt and saving for big purchases than men actually said they did. Husbands and wives, the survey concluded, “just aren’t getting through to each other about financial goals, priorities and worries.” No kidding.
 
Having more money doesn’t necessarily result in more conversations about it either. While 70 percent of wealthy wives said they shared the financial decision-making responsibilities with their spouses in a 2005 survey by PNC Advisors, fewer than half of their husbands said that was the case. (Most men said they were in charge, which was news to many of their wives.) The researchers found “an alarming lack of communication about wealth planning and goals, and significant differences between the sexes on financial topics — from control over finances to attitudes toward wealth — that can lead to greater problems down the road if not addressed.”
 
And that’s married couples! Those who are in a relationship, even if it’s a serious one, are even less likely to broach the topic.
 
As we mentioned earlier, having different views on money — or inaccurate assumptions about your partner’s views — doesn’t mean you can’t succeed as a couple. It just means that it’s even more important that you talk about them. Katie and Nick, for example, realized early on that they didn’t always agree on how they spent their money, or even how they managed and invested it. But they were able to overcome their differences by getting them out in the open and coming up with a plan that worked for both of them. (We’ll explain how they did that in more detail in the coming chapters.)
 
All five of us have learned that it’s usually not the differences themselves that threaten the relationship, but the unwillingness to discuss them. By not talking about money early on, we really make things worse. Couples don’t break up because they argued about money. They usually break up because they wait until they’re in a bind to bring up the topic, and then it’s often too late. By that point, if they realize that they have very different values or views when it comes to money, they may not be willing or able to reconcile them. That was the case with two of us in past relationships that ended.
 
Talking about money and finances can also reveal a lot about your overall goals and values. And if you discover when you have that conversation — as some of us did — that you and your partner have opposing goals or principles, then money isn’t the only issue. If you don’t share the same core values in a relationship and you’re not working towards the same things, it’s very hard, if not impossible, to build a successful future together no matter how much money you have. That’s another reason why it’s so important to talk about money before you move in with, or marry, someone. You want to make sure that you’re compatible not just physically and emotionally, but financially. (Check out our money type guide in Chapter Four to see how you match up as a couple.)
 
So why is it so difficult to have that first conversation? See if any of these sound familiar to you:
 
 
We’ve been told most of our lives that it’s impolite to talk about money.
 
Few of us are accustomed to talking about our finances at all — even with our closest friends or family. So why should it be any different with the people we date? Before we formed our money club in 2006, none of us were really comfortable talking about money with anyone. The prospect of spilling the intimate details of our finances with four other women, even in a completely confidential setting, was more than a little nerve-racking. Now of course, we’re glad we did. Both our finances and our friendships have improved because of it. Still, we know that bringing the subject up with the person you’re involved with can be tricky, especially in the beginning of your relationship.
 
You may be wondering how much he earns, how much debt he has, and whether he can support himself and maybe a family, too. But you’re not likely to ask him right away. Asking him about his financial status can seem as intrusive as asking for details of his past relationships, or looking through his email. And, even if your own finances are in pretty good shape, you may be reluctant to talk about your own income, how much you spend on clothes or nights out with your friends, or how much debt you might be carrying. You may worry that, if you’re doing well, sharing the details of your financial status could be misinterpreted as bragging. And if you’re not in great financial shape, you may fear that he’ll judge you harshly for mismanaging your money, or be turned off by the thought of having to shoulder your financial burden.
 
Robyn, who’s now in a long-term committed relationship, remembers being reluctant to ask too many questions about past boyfriends’ finances because she never wanted them to think that she was after their money or with them for financial reasons — even though she was perfectly able to take care of herself and they could likely see that. She felt particularly uncomfortable prying for details, especially if the man she was with seemed reluctant, or defensive, about providing them. So she’d often just drop the subject. (Note to readers: There’s usually a reason why he’s acting that way, and it may come back to haunt you later if you don’t persist.)
 
In North America, we’ve been brought up to believe that money is an extremely private matter. Few of us know how much our closest friends earn or how much debt they have. So it may seem rude to pose those questions to our partner. But here’s the difference. You can argue that knowing how much your friend earns, or how much she owes, isn’t any of your business because it has no real effect on you — unless she’s been crashing at your place rent free, or you’ve loaned her some money. But your partner’s financial status is your business if you plan on sharing your lives and having a future together because it has a direct effect on you. If you move in together and he can’t pay his half of the rent, you’re stuck with it. If he has a terrible credit score, it will affect both of you when you try to get a mortgage or a car loan. If he has a lot of debt he hasn’t told you about, that may mean you both have to postpone plans to get married, buy a home, start a family, or even take a vacation. If he earns less than you, you may be responsible for covering more of the bills. And vice versa. You’re no longer in it alone. You’re in it together. So, once you are in a committed relationship, you both have every right to know each other’s financial details. That doesn’t mean divulging them won’t be difficult, though, especially if either of you are in financial trouble since . . .
 
 
It’s embarrassing to admit that our own finances aren’t in great shape.
 
Even though the five of us were committed to improving our finances and to supporting one another, it was still tough for Sandra to admit (at our first Smart Cookies meeting in 2006) that she’d blown right through the $8,000 she’d so diligently saved while living at home — and now had credit card debt, too. Angela and Robyn were equally sheepish as they explained to the group how they’d pretty much given up control of their finances to their exes in relationships that had recently ended, so they had little confidence or experience managing their own finances, which were in total disarray at the time. Even Katie, who made the highest salary among us, winced as she revealed that she had become such a shopaholic that she actually hid new purchases from her then fiancé. And Andrea remembers being petrified to admit to the rest of us that she owed $18,000 on her credit cards. She was worried that the people she liked and respected — including her boyfriend — would think she was a failure, or a fraud, if they found out how much debt she’d accumulated trying to maintain a lifestyle and wardrobe she couldn’t afford.
 
Before she joined the Smart Cookies, Andrea remembers being reluctant to reveal any details about her debt to her then boyfriend, even though they were living together. She knew he assumed that she was good with her money because she conveyed an image of success: a high-powered career in marketing, designer clothes, and a chic Sex and the City lifestyle. He had no idea how much of it was really being financed through her credit cards. “When we finally started talking about money, he found out that I was bad at managing it — actually, that I wasn’t really managing it at all!” she remembers. “He was shocked.” She’d considered her debt and the way she spent her money to be such a personal matter that she was unwilling to talk about it, even after they moved in together and started splitting expenses. At first, it was easy to pretend that she had everything under control — especially since he had no idea that it actually wasn’t. By the time she admitted her financial shortcomings, overspending was no longer the only issue. It became a matter of trust and honesty. He wondered why she hadn’t been upfront with him earlier, and worried about whether there were other issues she was holding back. Andrea felt guilty about not opening up to him sooner and putting them in a worse financial situation because of it. The awkward feelings that followed weren’t the only reasons why they eventually broke up, but they were certainly a contributing factor.
 
Of course, Andrea was so worried about admitting to her own financial faults that she didn’t stop to think that even if her boyfriend was good with money then, that may not have always been the case. Chances are, you’re not the only one who’s made mistakes with your money. In fact, sharing your money woes might actually make your partner more comfortable opening up about his or her missteps with money, too, and bring you closer. We found that to be the case when we formed our money group. It was a little nerve-racking for each of us to confess the details of our financial situations at that first meeting of the Smart Cookies: how much we made, how much we owed, and how much we needed to learn about managing our money. But it was also a great relief. Admitting our own money mistakes, and learning about the financial faux pas that our friends had made along the way, actually made us feel less anxious about our situations and created an immediate bond between us.
 
Even if your significant other is one of those rare types who has always been responsible with money, a relationship means that you’re in it together now. It’s in both of your best interests to work as a team towards turning your finances around. And don’t beat yourself up if he’s better with money than you are! Remember that being able to manage your money successfully is just one skill that you can bring to a relationship. There are surely other areas in which you have more experience or expertise and he can learn from you. When you’re dealing with money matters, as with any challenge in a relationship, you both need to be honest and supportive with each other — willing to listen, without judging, and to help. Even if he’s got a great record when it comes to managing money, he might still learn from some of your mistakes. Though, of course, that means you must first be willing to admit them.
 
 
Talking about it will force us to confront our financial reality.
 
Being embarrassed about admitting that your finances are in shambles is one thing. But another big reason none of us had wanted to address our money problems until the first Smart Cookies meeting was because it would force us to acknowledge that we weren’t happy with the way things were working out financially, and that it was time to take responsibility for the mistakes we’d made, or were still making. And we knew that would probably require some big changes in the way we spent and managed our money.
 
Those same concerns often keep us from talking about our finances with the people who are closest to us. In fact, it can be even harder to talk about it with our partners. As we said earlier: Friends have each other’s best interests at heart but, usually, no real personal stake in each other’s finances. But that’s not the case when you’re seriously involved with someone. The financial decisions you make will have lasting consequences for both of you. And that can be a scary thing to think about — especially when you don’t feel like you’ve been making the best decisions yourself.
 
 
KATIE’S STORY
 
One thing I knew for sure was that starting the conversation about money wasn’t going to be comfortable. I didn’t think there’d be a blow-out screaming match, but I knew it would mean change. And even after my husband and I first got engaged, I still looked at my spending habits as my own business, as long as I was using my own money. It didn’t hit me that my decisions were now affecting both of us. After we announced our engagement, I realized I was regularly spending $200 to $300 at a time on things like clothes, hair products, and jewellery, all in the name of “the wedding and honeymoon.” As my pile of purchases slowly took over our dining room, my fiancé, Nick, suggested we make a budget. At first, I bristled at the thought: Why should I be held accountable for how I spent my own hard-earned money? The nerve! I should be able to do whatever I want with it, right? For months, I angrily dodged any money-related conversations. None of your business, buddy, I would think to myself.
 
The situation finally hit home when Nick presented me with a well-researched plan to rent out the second bedroom of our tiny apartment to an international student. I flew off the handle. Why on earth would we do that? With sadness in his eyes, he calmly explained how he felt that in order to move towards achieving our common goals — starting a family, buying a home, and having the freedom to travel where and when we wanted — we needed more money. I argued that we both made good salaries and we didn’t pay that much in fixed expenses, and for a minute he didn’t say anything. And that’s when it hit me: As Nick was relentlessly planning and saving for our future, I was frittering away my income on myself. I was buying things that might give me a temporary lift but were keeping me from saving for the things I really wanted to get out of our life together. That was a huge breakthrough moment for me. I came clean, and I agreed to — finally — have that dreaded money conversation and put together a budget. And I vowed from then on to work on our finances together. So we decided to set aside one day each month to review our financial goals and to look at investment opportunities. Now that we both feel comfortable talking about it, discussing spending and saving is a part of our daily conversations, so we’re always clear on where our money is going. I’m so glad we did. Cutting back on my spending wasn’t easy at first, but it’s one of the reasons why we were able to pay for our dream wedding — in cash — and to afford a great condo downtown. And, I realized, I never really missed not having another pair of jeans or more jewellery — especially when it meant being able to have the things I truly wanted and to know I was helping us move closer to the goals we’d created together.
 
Of course, you may not be the only one with financial problems to fix before you can build a future together. You might find out that he’s a lot worse with his money than you are.
 
 
You fear his finances may be in worse shape than you thought (or hoped).
 
A friend of ours was in a relationship with a man who spoiled her endlessly. At first we were all a bit envious. He took her to Paris, bought her expensive clothes, and wined and dined her at all the top-rated (and priciest) restaurants in the city. She assumed that he could afford such a decadent lifestyle and must be doing really well financially. It wasn’t until after they got married that she discovered the ugly truth: That he had been charging almost everything on his credit cards. And he’d racked up an enormous debt. She might not have enjoyed her cashmere sweater, or that five-course dinner, as much had she known that she’d eventually be paying for it herself — plus interest! — once they were married. Sure, everyone loves to be pampered, but if you plan on staying together, you better make sure you know where that money is coming from — and whether it’s worth borrowing against your future to impress you now.
 
Sandra put off bringing up money with her boyfriend, Jason, for months, even though she was worried that they were spending too much on each other. Things were going so well that she didn’t want to cut their “honeymoon stage” short by bringing up heavy subjects like paying off debt and planning for a future together. Plus, she knew it would be challenging to figure out how to align their financial habits and make sure they were both putting money away for their future, not spending against it — especially when he’d become accustomed to using his money as he wished without having to be accountable to anyone. When it finally came up, they were able to talk about what they wanted and expected the other to contribute to their relationship financially. And planning the trip together to Hawaii helped, too, since it gave them a shared goal to which they could both contribute. It also gave her boyfriend a tangible reason to rein in his spending habits. She also encouraged him to spend less on her. Instead of eating out on their dates, one of them would cook a romantic dinner for the other. Instead of taking her to Starbucks for coffee drinks, they went downstairs to the complimentary coffee bar in his apartment building. Instead of spending a lot on afternoon activities, they’d hang out for free at the pool at his building. They had just as much fun together, but spent a lot less.
 
The reality is committing yourselves to working together on a financial plan and to contributing equally (or, as close as you can, depending on the incomes you earn) is akin to committing yourselves to each other. It’s a big step in a relationship, and a crucial one. If either of you continues to spend — or to use a credit card — as if you’re still single, you’re just pushing your future together further away and risking the chance that one of you will end up resenting or distrusting the other for it.
 
 
The Importance of Being Honest
It’s not surprising that many of us — especially if we’re financially successful — worry about the consequences of falling in love with someone who isn’t. What if you learn that he owes $20,000 on his credit cards? Or that he makes half of what you do? What if you discover that the reason he has that nice apartment is because his parents have been paying the rent? Or if he admits that they’ve never saved a penny or opened a retirement account?
 
You may be in love — or so you think — but how can you possibly start planning a future together? Having a frank discussion about your finances, and about your concerns, is the first step towards doing that. If you’re both willing to work on your bad habits, and committed to contributing your fair share to reach your financial goals, then you can make them happen (albeit, maybe a little slower than you’d hoped). But if they’re not willing to change, or even to talk about their financial faults, the reality is that you may not have a future together — well, unless you’re willing to foot the bill for it. And that’s a lot to ask of someone.
 
Give him some time, though, especially after you first bring up the subject. You’re a team now. That means he shouldn’t have to do this all on his own. You can help by being supportive emotionally and maybe even helping to pay down your partner’s debt (think of your future!), or picking up some of the bills while they do.
 
Katie admits it took her a little while to fess up to her then fiancé that she was overspending on things for herself — at the expense of goals they had together — and to improve her habits so that she was contributing to their future, too. She found that it’s just as tough, if not tougher, for a man to concede his mistakes — especially if he was overspending on you! Men often feel additional pressure because of their traditional role as providers. (Many of their fathers may have been the sole breadwinners, after all, supporting an entire family.) So it’s really difficult for some to admit that they’re not even doing a good job of providing for themselves, especially if they’ve led you to believe otherwise.
 
If you want to stay together, though, it’s essential that you talk about it. Both of you need to feel as if you’re each contributing to the relationship, no matter how much you’re earning or owe. And he needs to behave financially as if he’s part of a couple now, not a bachelor trying to woo a woman with expensive gifts and dinners. As we said earlier, once you’re in a committed relationship, the financial decisions you make can affect both of you — even if you’re using your own money.
 
The good news? We know from personal experience and from talking with dozens of couples that if you can agree on your goals, and you are each willing to take steps to improve your finances and to play your part in reaching those goals, then you can have a wonderful future together even if you’re a financial mess right now. (We’ll help you each get your finances in order in the coming chapters, too.)
 
 
You’re worried you’ll discover you have very different financial priorities or goals.
 
If you’ve based your vision of the future together on assumptions you’ve made and not actual conversations, you may not want to know otherwise — even if you suspect it. After all, what if you discover that you either have different goals or very different ideas about how you’re going to reach them? That may leave you questioning your future together altogether. So, instead of talking about it, you simply clam up, avoid the conversation, and hope for the best (e.g., that he’ll change his mind, or come to his senses, without you nudging him).
 
We probably don’t need to tell you that this isn’t the best approach. If you don’t discuss your goals and views on money, you may end up learning about them the hard way or allowing the gap between your goals to grow wider and wider. That makes it harder to find a compromise down the road, as Angela found out.
 
 
ANGELA’S STORY
 
My former boyfriend and I picked up David Bach’s book, Smart Couples Finish Rich, when we moved into our first place together. We were actually excited to read it and get started on working together to improve our finances. At least we thought we were. The first exercise we did required us to each list our most important values and then create common goals based on those values. He picked power, freedom, and independence. My choices were completely different: happiness, family and friends, and making a difference. I wasn’t too worried about it initially. But then we mapped out our financial goals based on these values. As we read them off, we discovered that we had completely contrasting ideas of our future together. We took one look at each other’s goals, tucked our papers into the book, and left the topic alone. It was clear that we had very different intentions about what to do with our money and at that time, neither of us was willing to change our goals or the spending and saving habits that we’d adapted. We thought that if we just stopped talking about it, we could avoid any problems. But we quickly learned that the real problem wasn’t our different views on how to manage our money; it was the fact that we weren’t willing or able to talk about it as a couple, to resolve our differences and come to some sort of compromise we both could live with. We ended up breaking off the relationship a few months later, in part because we’d convinced ourselves that we had incompatible ideas about our futures, even though we’d never given ourselves a chance to resolve them.
 
 
So, what happens if you and your partner find out that you don’t have the same goals? In some cases, you may determine that they’re not so far apart. If one of you wants to start a family a little sooner than the other, for example, you may be able to adjust your expectations a little to find a compromise. What if one of you wants to live in the city, while the other one wants to move to the suburbs? Why not try to find somewhere in between that captures some of the qualities that you like about each (a suburb with a main street, for example, where you can live above storefronts or near a train station)? Maybe having a big cushion of savings is really important to one of you, but the other one likes to be able spend a little more regularly on travel, home repairs, or new furniture. Why not come up with a figure that you’re both okay with leaving in the account — we recommend an amount that would cover about three to six months’ worth of bills and expenses — then agree to use any additional savings towards vacations or other purchases? Or, set up another savings account and start a separate vacation or furniture fund. By talking about your differences, you can often find a way to bridge them and come up with a plan that works for both of you, even if it’s not exactly the same as the one you had in mind initially.
 
Having slightly differing visions for your future together, or different priorities when it comes to how you spend your money, really isn’t unusual. The trick is coming up with a plan that takes each of your visions and priorities into account. That could mean putting some of your personal goals on hold, temporarily, or reassessing what’s really important to you. But, as we’ve found, the result can be even better than the life you’d imagined (in part, because you’re sharing it with the person you love). We’ll show you how to do that in Chapter Three.
 
Of course, there’s always the chance that your goals are completely incompatible. Maybe you want to take at least one big vacation each year, while he hates to travel and prefers to stay home and spend any extra money renovating the house that you think is perfectly adequate as it is. Maybe buying a home is really important to you, but he prefers to rent and spend any extra savings on weekend trips and dinners out with you and his friends. Often, money isn’t really the issue in these cases, it’s lifestyle. But how you want to spend it reveals a lot about your underlying values and goals. If yours are very different from his, then you have to come up with a reasonable compromise, or acknowledge that your relationship just might not be the right fit.
 
 
Getting the Conversation Started
Don’t worry. You don’t need to do it on the first date, or even the tenth. What you each do with your money won’t become a big issue until it’s clear that you are committed to a future together. But as soon as you’re in a serious relationship and are talking about sharing your future, it’s time to talk about money, too.
 
So, how do you bring it up?
 
Well, you can always use this book as an excuse. But there are other ways to broach the topic, too. Maybe you’ve got something you’re saving for together, whether it’s your wedding or just a romantic vacation. As you make your plans, you can use it as an opportunity to talk about some of your other goals and even create a spending plan together, like Sandra and her boyfriend did when they planned their trip to Hawaii (see Chapter Six). If you have some money saved up, you could suggest that you move that into a joint high-interest savings account and that you both put a set amount into the account each month so that you’ll have the money for something you both want — or just to keep as an emergency fund for unexpected expenses.
 
Or, if you’re talking about moving in together, expand the conversation about how to split bills and expenses to include talking about setting money aside for your future goals too. That is a great way to start figuring out how you can work together to manage your money and achieve your goals.
 
Or try the reverse. Ask him if you can spend some time tonight or this weekend talking about your plans for the future. Trying to figure out how you can reach those goals together is a natural way to ease into a more detailed discussion on money. And it will help keep you focused on building a future together, rather than dwelling on any differences you may have in your finances now. You can use the Perfect Day exercise in Chapter Three to help you come up with a list of shared goals.
 
In fact, over the next few chapters, we’ll give you specific details on everything you need to cover money-wise before you get married (or asap, if you’re already married) — from merging and managing your money to goal-setting and goal-getting. In the first conversation, though, you don’t need to cover all of that. You might feel more comfortable just talking generally about your hopes and dreams, and any financial concerns you have. Then you can get into the nitty-gritty details of your finances in the follow-up discussions.
 
As you prepare for that first conversation, keep these tips in mind:
 
Choose a comfortable setting. If you live together, think of the place where you both feel most relaxed outside of the bedroom. (We don’t want you falling asleep!) Maybe you enjoy cozying up on the living room couch or sitting together at the kitchen table. If you’re the one who is initiating the discussion and you don’t live together, suggest having it at his apartment — assuming he doesn’t have any roommates or that they’ll be out — so that he feels at ease in his surroundings.
 
Cut out the distractions. Make sure the TV is off. Put away your cellphones and turn off the ringer on the home phone. Make sure your partner won’t be focused on other things. If he’s a huge hockey fan, for example, the week of the Stanley Cup finals may not be the best time to have this conversation. You don’t want to have this discussion over dinner, when you might be focused on food, but rather after the dishes and table have been cleared and cleaned. You may want to share some wine, though, as you talk. (As long as it’s not too much wine — you do want to remember this conversation after all.)
 
Agree together on a time. You don’t want to bring this up in the morning before work or right before you head out for an evening, but ensure that you’ve allotted plenty of time so you don’t feel rushed. Nor is it wise to initiate the conversation after he comes home with a big-screen TV and you’re livid — just as it wouldn’t be a great time for him to launch into the conversation about how careless you are with your money when you’ve returned from a shoe sale with bags in hand. You want to make sure that neither of you is angry or upset when you start the discussion so that, hopefully, you won’t be at the end either.
 
Remember that you’re on the same side. Don’t point fingers. Don’t get defensive. And try not to rush to judgment. Remember, you want to tackle any financial problems you have as a team. It’s important that you offer each other support and encouragement as you share the details of your finances and then look for ways you can help each other, rather than making the other person feel bad about spending too much, saving too little, or not earning enough. Focus on the future, and what you can each do now, rather than on what’s happened in the past.
 
Give a little to get a little. If you volunteer your own fears or feelings about a financial issue, your partner may feel more comfortable doing the same. Be candid about past mistakes — or even current ones — and about any concerns you have, and encourage your partner to do the same. It’s not just about coming up with an arrangement that works for both of you, but understanding why it works for both of you. By being honest about your feelings now, you can prevent either a lot of anger or resentment later on. But you must also be willing to make the changes necessary to address any concerns your partner has and to improve your finances so that you’re each doing your part.
 
Stay positive. Instead of talking about all of the things you think the other person is doing wrong and how misdirected you might be, talk about what you are both doing right and how you can get to your goals even faster by working together. Identify each other’s strengths, and use those to figure out how to divvy up your financial responsibilities. Talk generally about the goals that you share and how you can achieve them.
 
In the coming chapters, we’ll help you prioritize those goals and come up with a strategy based on your current situation that can help you reach them even sooner than you may have thought possible.
 
 
Smart Cookie Summary
 
Discussion Questions:
 
You can ask yourself these questions and keep your responses in a notebook. Or use these to get the conversation started with your partner.
 
1. Have you ever talked about your finances with your friends and family? Why, or why not?
 
2. What kinds of money issues have you encountered in past relationships? How did you address them?
 
3. What do you think are your biggest strengths and weaknesses when it comes to managing your money?
 
4. Looking back, what would you have done differently with your own money?
 
5. What are some of the benefits you see of managing your finances as a couple?
 
 
Smart Steps:
These are steps that you can take yourself, or that you and your partner can do together.
 
1. Make a list of your own money strengths and weaknesses. Are you good at making money, for example, but have trouble reining in your spending?
 
2. Make a list of your partner’s strengths. Is he (or she) super-organized, for example, or detail oriented? Does he (or she) have a great credit score? These are strengths that can help you determine what roles you’re each best suited to play in managing your money. It also helps to remember each other’s strengths as you begin your discussion.
 
3. Make a list of your top five personal financial goals. What would you like to improve about your own finances?
 
4. Make a list of your top five financial goals as a couple. Do you want to be debt free in two years? Do you want to be able to buy a home in three?
 
5. Bring these lists with you when you sit down to discuss your finances with your partner, and use them to help get the conversation started.

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The Smart Cookies' Guide to Making More Dough

The Smart Cookies' Guide to Making More Dough

How Five Young Women Got Smart, Formed a Money Club, and Took Control of Their Finances
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Excerpt

Living Large on Less

Saving money for the future you want doesn’t mean feeling guilty about every cent you spend on yourself now. Who would want to stick to a plan that entails that much suffering?

The Smart Cookies are all about preserving the lifestyle you enjoy – just doing it for less. Each of us managed to find lots of ways we could save extra money, without feeling like we were giving up the things that gave us pleasure. When it comes to deciding what spending strategies work best for you, it’s important to come up with some that fit with your lifestyle, not just your goals. We’re not asking you to stop visiting the spa or to swap your cashmere sweater for a polyester blend just because it’s cheaper. The idea is to figure out what is really important to you and what’s not. We learned that we all spent a lot of money on things that didn’t provide a great deal in return. And even in those areas that are important to us, there were ways to save money without sacrificing our social lives, stylish wardrobes, or the small luxuries that brighten our days.

Some places to look should be obvious to you by now. If you haven’t watched the Discovery Channel in more than six weeks, maybe it’s time to consider switching to standard cable. If you’re spending a disproportionate amount of your paycheck on dinners out, try meeting your friends for brunch or a drink instead. There are lots of easy ways to cut back a little without lowering your standard of living. Here are a few more of our personal favorites:

Socializing:

• Instead of meeting a girlfriend for dinner, suggest meeting for breakfast, lunch, or even coffee, as we mention above. If you eat out, dinner is always the priciest meal. And you are likely to have just as much fun no matter when or where you meet a friend. If you’re dying to check out an expensive new restaurant, why not go early for a drink and split an appetizer? You’ll get to sample the ambience and the menu for a fraction of the cost.

• Have a Girls’ Night In: Rather than going out for dinner with your girlfriends, have $6 Girls’ Nights In. Each person can spend $6 on food made for sharing – like pita bread, olives, and a container of hummus, for example, or a small pizza – and bring a regifted wine or combine funds with others to buy a bottle. We estimate that we collectively saved at least $3,600 just by doing this once or twice a week for one year. (How? We figured that we each would have spent at least $20 had we gone out instead. So we took that $14 saved, multiplied it by 52, then by 5, the number of Cookies in our money group.)

• Be fashionably late. Eat dinner at home before you go out to meet your friends. Then you can snack on an appetizer or skip the meal altogether and just have a drink or two with your friends.

• Eat early. Most restaurants and bars have happy-hour specials between the hours of 5 and 7 p.m. on weekdays, with drinks at half price and a range of menu items for under $10. Why not meet a friend right after work for a half-price drink and appetizer and then head home for dinner?

Beauty and Body Maintenance:

• Exercise with friends. Health clubs are expensive. Many cost more than $1,000 a year and often require a commitment of a year or more. Gyms count on the likelihood that most members stop going, at least regularly, after a few weeks or months but are still stuck paying monthly dues until their contract runs out. Before you join a gym, consider organizing a group of friends for daily or weekly walks, runs, hikes, or bike rides instead. This way you can be social and be fit – and working out with friends will give you added incentive to stick to your exercise regime. If it’s too cold or too hot where you live to exercise outside regularly, consider joining a Y, where the membership rates are often significantly lower than those at a higher-end health club.

• Make the most of municipal facilities. Most cities have free or discounted access to tennis courts, swimming pools, and other sports facilities. Check to see where you can play for less. Some cities even offer free use of boats at city-owned lakes and/or free (or discounted) rentals of golf clubs and use of the range or course at city-owned facilities.

• Let your hair down. Stretch out the time between haircuts. If you usually get your hair cut once every six weeks, try stretching it to once every eight weeks and save yourself the cost of at least two haircuts plus tips each year. If you color your hair, use a base color but skip highlights, which are costly and more damaging to your hair anyway.

• Dye it yourself. Yes, it’s best to leave complicated hair-color jobs, like bleaching, to the pros. But if you’re just covering gray roots or experimenting with a deeper shade of brown, you can buy good temporary, semipermanent, or permanent hair color at your local drugstore for a fraction of the cost of getting it colored in the salon.

• Shop at the drugstore, not the mall, for your beauty products. Some of the most effective and popular products can be found at your local drugstore for a lot less – from Maybelline’s Great Lash, which is often cited as a top brand among models and makeup artists, to Oil of Olay’s Regenerist, which was ranked as the most effective antiwrinkle cream by Consumer Reports in its January 2007 issue, even though it was the least expensive brand tested. (Of course, the cheapest and safest way to keep wrinkles at bay is to buy sunscreen and to avoid the sun. Consumer Reports found that the top performers reduced the average depth of wrinkles by less than ten percent, on average, after 12 weeks – barely enough to be detected by the naked eye.)

• Get made up for less. Take advantage of the free makeovers offered at makeup counters and boutiques before a big night out. And don’t feel pressured to buy. If you like the results, you can just make note of the blush, eye shadow, eye liner, and lipstick colors that were used. Then go to your drugstore and look for cheaper makeup brands in the same shades. Or if you have a friend who always looks great, ask if she’d be willing to share her secrets and/or make you over one afternoon.

• Paint your own nails between pedicures. We wouldn’t recommend that you give up pedicures and manicures altogether. It’s nice to be pampered occasionally. But instead of spending $20 to $40 for a new paint job in a salon every time your nail polish chips, buy an extra bottle of the color polish that your salon used and do the touch-ups yourself. This way you can stretch out your time between visits to the salon and still have fabulous nails.

Saving at home:

• Talk less. If you don’t use your cellphone that often, see if there’s a cheaper monthly calling plan that allows fewer minutes. Compare rates, not just between packages but between service providers.

• Lose the landline. If you use your cellphone a lot, ask yourself if you really need a landline. If you still want phone service at home, consider switching to an Internet Phone Service (or VoIP). These providers route your calls through your high-speed broadband Internet connection, not a phone line. The quality is comparable but the cost is usually much lower than regular phone service. (Check out nextadvisor.com for a comparison of different VoIP services.)

• Cut the cable. Do you really need all of those cable channels? You could save a lot of money and maybe free up some time by just using basic cable. By giving up cable, Sandra saved both money – $900 a year! – and time. She used the time she once spent sitting in front of the TV to exercise, read, or hang out with friends, activities that proved to be more fulfilling to her than staring at a screen.

• Go paperless. Read your favorite newspaper online instead of subscribing. Or go to aggregate news sites like Google News, where you can read articles from publications all over the globe for free. Many magazines are also starting to post much of their content online for free.

• Be energy efficient. Turn off the lights when you leave a room. Turn the thermostat up in the summer or down in the winter when you’re not home. Try a fan and open a window before resorting to the air conditioner. Unplug appliances when they’re not in use. Switch to energy-efficient bulbs. Not only will you be saving money on your electric bill, but you’ll be helping the environment too.

• Buy in bulk. Cut down on grocery costs by shopping once a week (where you can load up at a large discount store like Costco) instead of picking up a few items every day at the nearest shop. Always bring a list when you shop so you don’t get sucked into making impulse purchases. And try not to shop when you’re hungry and may be tempted by every delicious display.

• Decorate creatively. You can save money by printing out photos you like from the Internet, or photos you’ve taken, and having them framed instead of buying prints. Or go to a fabric store and buy a piece you like and have it framed. Pick up candles and knick-knacks from discount stores or flea markets to add a personal touch. Try craigslist.org, the classifieds, or yard sales to find gently used furniture at great discounts. You can always buy a slipcover for the couch if its color doesn’t match your decor – and for a lot less than it’d cost to buy a brand-new couch.

Shopping:

• Check for discounted display items. When we are making a major purchase, we always ask the salesperson if the store has any of last year’s items on sale or if there’s a display or demo model for sale. This works for cars, appliances, mattresses, furniture, and almost any big-ticket item. You would be surprised at how much you can save.

• Shop in-store then buy online. Last summer Sandra wanted two new pairs of high-end jeans. She went to Holt Renfrew and tried on the style and size that she wanted, then she went on to eBay, found exactly what she wanted, and paid $200 for three pairs of jeans that would have cost a lot more at the mall.

• Prowl the web for promo codes. Once you’ve filled your shopping cart at an online retailer, open another window and type the name of the retailer and “coupon” or “promo code” into your favorite search engine. You should be able to find discounts or coupons that you can use when you check out – saving as much as 30 percent or more.

• Carry the card. If you regularly shop at a particular store, see if they offer a frequent-shopper card. You can join for free and receive coupons (via mail or e-mail) and qualify for special discounts. Some stores give out coupons worth a specific cash amount off your next purchase once you’ve spent a certain amount of money there over time (for example: for every $100 you spend, regardless of how many separate trips it takes to reach that amount, you’d get a $5-off coupon to use within a certain period of time).

• Sign up for sale updates. Most clothing stores and boutiques now send out regular e-mail alerts to customers on their mailing lists about sales and special events. It takes two minutes to sign up, but the savings can be substantial. Another bonus: You can often plan ahead once you know when your favorite stores’ regular sales are, so you can save up your money and then stock up on some of your favorite looks for less.

• Buy some time. If you’re planning to shop in the same mall or retail area for a while, put the item you’re considering on hold for a few hours. Then walk around before you decide whether to go back to the store and buy it. Once you’re out of the environment and have had some time to think about your purchase, you may decide you can easily live without it.

• Scour secondhand stores. Thrift stores, vintage stores, and other secondhand shops are often treasure troves for the savvy shopper. Sure, you have to do some digging, but you can often find designer clothes and accessories at deeply discounted prices. Better yet, drop off some of your gently worn clothes, and you may get an even trade or come home with some extra money as well as extra clothes.

• Go generic. Most grocery stores offer generic or store-brand versions of everything from cocoa to cookies, even diapers and baby wipes. Often the quality is comparable; the generic or store-brand versions are just less expensive because they don’t spend much on design or marketing. If you pay out of pocket for medicine, you should also check regularly to see if generic versions of your prescription drugs are available yet. Under law, pharmaceutical companies must allow generic versions of their brand-name drugs to be sold after a certain period of time has elapsed. (Many health insurance companies now routinely require the use of generics, unless otherwise prescribed, in order to cut costs.)

Be a Fashionista (for Less)

It was essential to each of us that we not sacrifice our style for our savings or vice versa, and we’ve spent a lot of time brainstorming strategies to keep both our wardrobes and our wallets well stocked. In addition to the general advice listed in the section above, we’ve outlined our top ten tips below to help you stay fashionable and financially savvy:

1. Take inventory of your closet quarterly: The change in seasons is the perfect time to take stock of what you have in your wardrobe. You’re going to be rearranging your closet anyway, so why not assess each item as you do? Is it in good condition? Are you still excited to wear it? Is it still stylish or is it out of date? Does it feel fashionable or frumpy? Your responses will help you decide what to do with it.

2. Clear out the clutter: As you’re going through your clothes, shoes, and accessories, organize them into five piles: Save (split into two: As Is and Needs Work), Sell, Dump, or Donate. Hold on to only those items that still make you feel fashionable when you wear them. Some may need mending or updating; those go in the Needs Work pile. (Maybe a button came loose from a favorite blouse, or a heel needs to be replaced on one of your boots. These are easy fixes that don’t require a lot of money.) Sell items that are expensive or well made but don’t get you excited about wearing them anymore. You can post them on eBay or Craigslist or bring them to a consignment or secondhand shop. Dump those that have large holes or have been worn so much that they’re not worth salvaging. If an item of clothing really has sentimental value – like an old concert T-shirt or a sweater that your grandmother made for you – consider saving a patch of it in a jewelry box or scrapbook instead of letting it clutter up your closet. And donate clothing that’s out of date but in good condition or doesn’t fit you anymore. There are plenty of worthy organizations that accept gently used clothing, shoes, and small household furnishings, like the Salvation Army, Goodwill, and some Big Brother Big Sister facilities. You can also donate gently used business attire to Dress for Success, a non-profit that helps low-income women reentering the workforce. Or go online and look for other charities in your area, some will even come to pick up your donations. You won’t get money back, but your donation can help to lower your taxes. Clothing donations are tax deductible. Just don’t forget to document your donations carefully. Ask for a receipt from the charity estimating the monetary value of your donation.

3. Evaluate the essentials: There are certain items that every woman needs in her closet, no matter where you live. These include:
• a little black dress (simple and stylish)
• a classic button-up white shirt
• a pair of good jeans
• a rainproof coat (trench coats never go out of style)
• a pair of dress pants (black is best)
• a suit (either pants or a skirt and a matching blazer)
• a basic everyday bag (in a neutral color)
• a classic sweater (a V-neck, scoop neck, or cardigan that you can throw over your shirt when the temperature dips)
• a pair of black pumps
• a pair of boots (flat or heeled, dressy or casual, depending on your lifestyle)

If you’re missing any of these, put them at the top of your shopping list.

4. Build around the basics: Spend your money first on the essential building blocks of your wardrobe, like those listed above. These items should last for years, so it’s worth spending a bit more on them. In addition to the fashion fundamentals, there may be some pieces that you decide to buy or replace each season or every few seasons – from a winter coat (unless you live someplace warm) to a pair of boots to a swimsuit. As you shop to expand your inventory, think about additions that will pair well with your essential items (a top to wear under the suit, for example, or a wrap to wear over your black dress).

5. Mix & match: Each new item of clothing or accessory that you purchase should enhance your existing wardrobe. Before you buy anything new, ask yourself how many different outfits you could make by combining this new item with the clothes that are currently in your closet. Unless you’re buying something for a special occasion, like a wedding, you should be able to come up with at least four fabulous outfit combinations you could put together immediately after buying this item.

6. Know what’s trendy versus timeless: Once you’ve got lots of basic items that you can mix and match in your closet and hold on to for a while, you can start adding flair: fun clothes, shoes, and accessories that look cool now but may be past their prime by next year. Set aside a little money to spend on those trendier items that can freshen up your closet for the season. There’s nothing wrong with following fads. Just remember that they don’t last long; that’s why they’re called fads. So spend accordingly.

7. Don’t knock knockoffs: Within weeks of the major fashion shows, stores like H&M and Zara are already selling copies of the latest designer trends for discount prices. Since these styles probably won’t last more than a season or two anyway, it’s smarter to spend less on them and save more for those classic pieces that you can keep in your closet for years. These stores do a great job of capturing the look of the moment for less. They’re also great places to pick up simple T-shirts and trousers and accessories to mix and match with your better-quality basics.

8. Get luxury for less: You don’t need to drop a lot of money to own designer brands. Look for discounted merchandise at sample sales or used on eBay. Or see if your favorite designer is offering a less expensive line. Superstore and H&M have both paired with well-known designers, from Joseph Mimrar and Marimekko to Karl Lagerfeld and Stella McCartney. Many upscale retailers also have discount outlets (think Holt Renfrew’s Last Call in Toronto) that are often clustered together in outlet shopping centers. You can get some great bargains on luxury brands.

9. Share & swap: If you’re sick of your clothes, or you want a new look for a special occasion but don’t want to spend a lot, ask your similar-sized friends if you can “shop” in their closets. Or organize a swap. Each person brings a few good items of clothing that they’re ready to replace, and then you swap items with one another. Your friends often have a different sense of style, so it’s fun to try on the clothes that they brought. You might not have picked them out yourself in a store, but they may look great on you. Plus, this way you know your clothes are in good hands (should you ever decide you miss them), and you’ve got new clothes to spruce up your style without spending a cent. Sharing clothes with your friends is also an easy way to give your wardrobe a boost without spending money. We do it all the time. In just one year, we saved about $5,000 by swapping outfits instead of shopping for new clothes for dates, weddings, and work functions.

10. Avoid deadline or emotional shopping: If you wait until the night before a big trip to buy last-minute outfits, you’re sure to overspend. You’ve likely convinced yourself you need certain items, and as the clock ticks, you’ll become more desperate to have them regardless of the cost. Same goes for dates, weddings, or any special occasion. If you’re short on time, consider borrowing a few items from a friend instead. Or wear something you already have in your closet but buy a new wrap or a necklace to update it. Always have a backup plan so you don’t get stuck spending too much.

Emotional shopping is just as dangerous. How many times have you “treated” yourself to a shopping trip to try to lift your spirits? Though you may feel some elation right after you buy a new outfit, the trip often ends up having the opposite effect once you realize how much money you spent. Plus, you may find when you get home that the great new shirt goes with nothing in your closet. But you weren’t thinking about that when you bought it – in fact, you weren’t thinking at all. You were fueled by pure emotion. When you have moments like these, it’s time to enlist the help of your friends and money-group members.
Earn Extra Cash

Now that you’ve maximized your job earnings, it’s time to think about boosting your earnings outside the office. There are so many ways to make more money without making a lot more effort, just by thinking creatively. Here are a few Smart Cookie tips to get you started:

• Clean out your closets. Rather than throwing your used clothes away, why not find them a new home, where they will continue to be loved? Smart Cookies clear out their closets on a regular basis and often sell the shoes and clothing items at a consignment store, on eBay, or on craigslist.org. One of the Smart Cookies makes about $300 at the end of each season and puts that toward new clothes. Katie sold her wedding dress for $800 on craigslist.org. You can do the same with clothes – or toys – your baby has outgrown. Some grow so fast that they never even get a chance to wear all the outfits that their parents bought or received as gifts, and a toy may hardly be used if the baby isn’t interested. Another possibility? Donate the clothes or toys to charity and keep the receipt. You can write off the value of your donation when you do your taxes the next year and feel good about helping out those who are less fortunate.

• Clear out the clutter. Here’s an incentive to clean up your home: You can get rid of your junk and make money by having a yard (or a garage) sale. Team up with friends, family members, or neighbors and combine your stuff. Then you’ll have extra help running the sale and extra inventory to attract more buyers. And who knows? You might end up swapping items with your friends or neighbors.

• Sell stock photos. If people regularly ooh and aah over your Flickr pictures, maybe you’re destined for photographic greatness – or at least a few extra dollars. It’s easier than ever to get your photos out in front of the public. There’s a lot of competition, but there’s also a lot of demand. Marketing stock photos can be a convenient way for you to build up a secondary income stream. Try Fotolia.com, Dreamstime.com, Shutterstock.com, and bigstockphoto.com to upload and market your photos.

• Rent your parking space. If you pay monthly for a space in a lot or garage, but you know your car will be gone during work hours, you can rent out your space during the weekdays to someone who works near your parking spot. Advertise the space on craigslist.org or in your local paper. Robyn rented out her space and earned an additional $50 per month.

• Rent your home for use as a location for commercials, TV shows, or movies. You can register your home with film studios, production companies, and advertising firms, which maintain lists of properties available for shooting. Check out eHow.com for tips or flip through Opening Your Door to Hollywood, a 2006 book by producer James Perry, which offers a step-by-step guide to renting out residential or business locations. Daily rates can range from a couple hundred to more than a thousand dollars (even more if your home is used in a movie shoot). Andrea’s friend and her husband had just built their dream home and needed to furnish it, but they were short on cash after finishing construction. They decided to register their home with a production company for use in TV and films. After just two commercial shoots, they’d already earned $20,000! Note: Be sure to ask for a written policy on what the company does in case of any damage to your home.

• Be an extra. If you’ve seen the Ricky Gervais show Extras, you know that jobs for extras can range from print modeling ads to movie shoots. You don’t need a Screen Actors Guild (SAG) membership or even any acting experience to qualify – just the patience to sit on a set for hours and the flexibility to try out a lot of different costumes and lines. Pay can range from $100 to more than $1,000 a day. Check your local classifieds or contact a casting agency. (For a list of agencies visit www.idocommercials. com/casting/Canada.htm.)

• Help friends find better jobs. Internet sites like H3.com connects employers with prospective employees, many of whom are already employed and not actively job-hunting, via networking. The rewards for referring a candidate who gets hired range from a few hundred dollars to as much as $5,000. This is a great way to break into the recruiting business, with no overhead. Andrea connected with a recruiter who specialized in marketing. Since she had a lot of connections in that field, she referred many of them to the recruiter. She earned additional money from the referrals and helped some friends land great new jobs.

• Plan that perfect day. If you love weddings, planned your own, and/or have always wanted to plan a friend’s wedding, why not do it and get paid for it? Many people would hire a wedding planner in an instant but can’t afford the rates that a professional charges. Find out what a beginner planner would charge to get an idea of what is reasonable for someone at your level. Once you’ve built up some contacts, you might also consider party planning in general – first for friends and then for bigger clients.

• Get paid for your opinion. Companies often need focus groups, and market researchers need consumers, to test new items or to share their ideas about new products, shows, or ad campaigns. You can earn $25 or $200, depending on the project and the amount of time required. (Check out research firms in your area for upcoming panels and focus groups. Greenbook.org has a large database of market research firms and focus group facilitators, searchable by area.)

• Reap rewards for research and writing. You may have grown up taking the Internet for granted, but there are plenty of people who aren’t familiar with it or are too busy to spend time on it. If you’re skilled at extracting information through a web search, you can hire yourself out as an Internet researcher for professionals like lawyers and writers. Why not make extra money at something you are already doing? (Check suite101.com, craigslist.org, or the job postings on mediabistro.com, mediajobsearchcanada.com, and jeffgaulin.com.)

• Be an undercover consumer. Sign up for a secret-shopper program, where you can eat or drink out for free while rating the restaurant, or shop and rate the retailer. You can often bring a friend as well. Three of the Smart Cookies are secret shoppers and have found it to be a great way to eat and drink at some fabulous restaurants for free! Check out www.sensusshop.com for more information. There are no membership fees.

• Consider contract work. If it won’t conflict with your full-time job, seek out freelance or contract work in the same field. By networking, Katie was able to get additional contract work providing public relations services for clients outside her full-time job, earning an extra $2,500 a month! (Eventually, as we mentioned earlier, she was getting so many referrals and requests for her services that she left her job to open her own PR agency.) Robyn learned about a project seeking registered social workers through the Board of Social Workers newsletter in her area. She was hired on contract for a project in which she made extra money meeting with and interviewing people who wished to adopt children – on her own time, outside her regular job.

Turn Your Pastime or Your Passion into a Paycheck

Do you spend most mornings exercising? Take a basic trainer’s course and start training friends and family at your local gym or at home, where you can charge hourly. Not only are you keeping fit, but earning extra money while you’re at it. Andrea’s friend Erin, a preschool teacher struggling on a low salary, turned her passion for fitness into extra earnings by becoming a personal trainer. In a year, she was able to increase her income by 20 percent and stay healthy and fit.

Of course, you don’t need to be a fitness trainer, but chances are you already participate in some pastimes that could make you money. In your notebook, make a list of at least five activities that you really enjoy doing, like shopping, knitting, walking your dog, or even drinking wine. Now spend some time brainstorming about ways you could make money doing any of these activities.

If you like shopping, for example, you could earn extra money working as a secret shopper on the weekends. Or you could take a part-time job at your favorite store – many retail stores hire extra employees to help out during the busy holiday season between Thanksgiving and New Year’s. Not only will you earn more money but you’ll get employee discounts on items you’d probably buy anyway (and save money on holiday gifts). Like knitting? Why not knit sweaters, scarves, or gloves and sell them to friends or give them as gifts on birthdays to save money. If you enjoy walking your dog, ask around to see if your neighbors need their dogs walked. You can make extra money walking theirs as well. Enjoy wine? Look for part-time work at your local wine store, or sign up for wine-tasting classes and see if the instructor needs an assistant at future classes. Many wine shops offer tastings and classes and might be able to use an extra pair of hands in exchange for free wine or a little money. That’s exactly what Andrea did. One of her former colleagues started a business that offered wine tastings at company events. Andrea offered to help out. It was a great opportunity for her to make extra cash, sample some wine, and meet new people.

If you enjoy playing basketball or soccer, consider coaching. If you are already taking classes in yoga or Pilates or dancing, consider training to become an instructor yourself. Or see if there are jobs available at the studio on the weekends or evenings – manning the front desk or helping to set up equipment, for example – in exchange for free classes. With a little effort and ingenuity, it’s possible to turn almost any pastime into a paycheck.

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The Smart Cookies' Guide to Making More Dough and Getting Out of Debt

The Smart Cookies' Guide to Making More Dough and Getting Out of Debt

How Five Young Women Got Smart, Formed a Money Group, and Took Control of Their Finances
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Excerpt

Living Large on Less

Saving money for the future you want doesn’t mean feeling guilty about every cent you spend on yourself now. Who would want to stick to a plan that entails that much suffering?

The Smart Cookies are all about preserving the lifestyle you enjoy – just doing it for less. Each of us managed to find lots of ways we could save extra money, without feeling like we were giving up the things that gave us pleasure. When it comes to deciding what spending strategies work best for you, it’s important to come up with some that fit with your lifestyle, not just your goals. We’re not asking you to stop visiting the spa or to swap your cashmere sweater for a polyester blend just because it’s cheaper. The idea is to figure out what is really important to you and what’s not. We learned that we all spent a lot of money on things that didn’t provide a great deal in return. And even in those areas that are important to us, there were ways to save money without sacrificing our social lives, stylish wardrobes, or the small luxuries that brighten our days.

Some places to look should be obvious to you by now. If you haven’t watched the Discovery Channel in more than six weeks, maybe it’s time to consider switching to standard cable. If you’re spending a disproportionate amount of your paycheck on dinners out, try meeting your friends for brunch or a drink instead. There are lots of easy ways to cut back a little without lowering your standard of living. Here are a few more of our personal favorites:

Socializing:

• Instead of meeting a girlfriend for dinner, suggest meeting for breakfast, lunch, or even coffee, as we mention above. If you eat out, dinner is always the priciest meal. And you are likely to have just as much fun no matter when or where you meet a friend. If you’re dying to check out an expensive new restaurant, why not go early for a drink and split an appetizer? You’ll get to sample the ambience and the menu for a fraction of the cost.

• Have a Girls’ Night In: Rather than going out for dinner with your girlfriends, have $6 Girls’ Nights In. Each person can spend $6 on food made for sharing – like pita bread, olives, and a container of hummus, for example, or a small pizza – and bring a regifted wine or combine funds with others to buy a bottle. We estimate that we collectively saved at least $3,600 just by doing this once or twice a week for one year. (How? We figured that we each would have spent at least $20 had we gone out instead. So we took that $14 saved, multiplied it by 52, then by 5, the number of Cookies in our money group.)

• Be fashionably late. Eat dinner at home before you go out to meet your friends. Then you can snack on an appetizer or skip the meal altogether and just have a drink or two with your friends.

• Eat early. Most restaurants and bars have happy-hour specials between the hours of 5 and 7 p.m. on weekdays, with drinks at half price and a range of menu items for under $10. Why not meet a friend right after work for a half-price drink and appetizer and then head home for dinner?

Beauty and Body Maintenance:

• Exercise with friends. Health clubs are expensive. Many cost more than $1,000 a year and often require a commitment of a year or more. Gyms count on the likelihood that most members stop going, at least regularly, after a few weeks or months but are still stuck paying monthly dues until their contract runs out. Before you join a gym, consider organizing a group of friends for daily or weekly walks, runs, hikes, or bike rides instead. This way you can be social and be fit – and working out with friends will give you added incentive to stick to your exercise regime. If it’s too cold or too hot where you live to exercise outside regularly, consider joining a Y, where the membership rates are often significantly lower than those at a higher-end health club.

• Make the most of municipal facilities. Most cities have free or discounted access to tennis courts, swimming pools, and other sports facilities. Check to see where you can play for less. Some cities even offer free use of boats at city-owned lakes and/or free (or discounted) rentals of golf clubs and use of the range or course at city-owned facilities.

• Let your hair down. Stretch out the time between haircuts. If you usually get your hair cut once every six weeks, try stretching it to once every eight weeks and save yourself the cost of at least two haircuts plus tips each year. If you color your hair, use a base color but skip highlights, which are costly and more damaging to your hair anyway.

• Dye it yourself. Yes, it’s best to leave complicated hair-color jobs, like bleaching, to the pros. But if you’re just covering gray roots or experimenting with a deeper shade of brown, you can buy good temporary, semipermanent, or permanent hair color at your local drugstore for a fraction of the cost of getting it colored in the salon.

• Shop at the drugstore, not the mall, for your beauty products. Some of the most effective and popular products can be found at your local drugstore for a lot less – from Maybelline’s Great Lash, which is often cited as a top brand among models and makeup artists, to Oil of Olay’s Regenerist, which was ranked as the most effective antiwrinkle cream by Consumer Reports in its January 2007 issue, even though it was the least expensive brand tested. (Of course, the cheapest and safest way to keep wrinkles at bay is to buy sunscreen and to avoid the sun. Consumer Reports found that the top performers reduced the average depth of wrinkles by less than ten percent, on average, after 12 weeks – barely enough to be detected by the naked eye.)

• Get made up for less. Take advantage of the free makeovers offered at makeup counters and boutiques before a big night out. And don’t feel pressured to buy. If you like the results, you can just make note of the blush, eye shadow, eye liner, and lipstick colors that were used. Then go to your drugstore and look for cheaper makeup brands in the same shades. Or if you have a friend who always looks great, ask if she’d be willing to share her secrets and/or make you over one afternoon.

• Paint your own nails between pedicures. We wouldn’t recommend that you give up pedicures and manicures altogether. It’s nice to be pampered occasionally. But instead of spending $20 to $40 for a new paint job in a salon every time your nail polish chips, buy an extra bottle of the color polish that your salon used and do the touch-ups yourself. This way you can stretch out your time between visits to the salon and still have fabulous nails.

Saving at home:

• Talk less. If you don’t use your cellphone that often, see if there’s a cheaper monthly calling plan that allows fewer minutes. Compare rates, not just between packages but between service providers.

• Lose the landline. If you use your cellphone a lot, ask yourself if you really need a landline. If you still want phone service at home, consider switching to an Internet Phone Service (or VoIP). These providers route your calls through your high-speed broadband Internet connection, not a phone line. The quality is comparable but the cost is usually much lower than regular phone service. (Check out nextadvisor.com for a comparison of different VoIP services.)

• Cut the cable. Do you really need all of those cable channels? You could save a lot of money and maybe free up some time by just using basic cable. By giving up cable, Sandra saved both money – $900 a year! – and time. She used the time she once spent sitting in front of the TV to exercise, read, or hang out with friends, activities that proved to be more fulfilling to her than staring at a screen.

• Go paperless. Read your favorite newspaper online instead of subscribing. Or go to aggregate news sites like Google News, where you can read articles from publications all over the globe for free. Many magazines are also starting to post much of their content online for free.

• Be energy efficient. Turn off the lights when you leave a room. Turn the thermostat up in the summer or down in the winter when you’re not home. Try a fan and open a window before resorting to the air conditioner. Unplug appliances when they’re not in use. Switch to energy-efficient bulbs. Not only will you be saving money on your electric bill, but you’ll be helping the environment too.

• Buy in bulk. Cut down on grocery costs by shopping once a week (where you can load up at a large discount store like Costco) instead of picking up a few items every day at the nearest shop. Always bring a list when you shop so you don’t get sucked into making impulse purchases. And try not to shop when you’re hungry and may be tempted by every delicious display.

• Decorate creatively. You can save money by printing out photos you like from the Internet, or photos you’ve taken, and having them framed instead of buying prints. Or go to a fabric store and buy a piece you like and have it framed. Pick up candles and knick-knacks from discount stores or flea markets to add a personal touch. Try craigslist.org, the classifieds, or yard sales to find gently used furniture at great discounts. You can always buy a slipcover for the couch if its color doesn’t match your decor – and for a lot less than it’d cost to buy a brand-new couch.

Shopping:

• Check for discounted display items. When we are making a major purchase, we always ask the salesperson if the store has any of last year’s items on sale or if there’s a display or demo model for sale. This works for cars, appliances, mattresses, furniture, and almost any big-ticket item. You would be surprised at how much you can save.

• Shop in-store then buy online. Last summer Sandra wanted two new pairs of high-end jeans. She went to Holt Renfrew and tried on the style and size that she wanted, then she went on to eBay, found exactly what she wanted, and paid $200 for three pairs of jeans that would have cost a lot more at the mall.

• Prowl the web for promo codes. Once you’ve filled your shopping cart at an online retailer, open another window and type the name of the retailer and “coupon” or “promo code” into your favorite search engine. You should be able to find discounts or coupons that you can use when you check out – saving as much as 30 percent or more.

• Carry the card. If you regularly shop at a particular store, see if they offer a frequent-shopper card. You can join for free and receive coupons (via mail or e-mail) and qualify for special discounts. Some stores give out coupons worth a specific cash amount off your next purchase once you’ve spent a certain amount of money there over time (for example: for every $100 you spend, regardless of how many separate trips it takes to reach that amount, you’d get a $5-off coupon to use within a certain period of time).

• Sign up for sale updates. Most clothing stores and boutiques now send out regular e-mail alerts to customers on their mailing lists about sales and special events. It takes two minutes to sign up, but the savings can be substantial. Another bonus: You can often plan ahead once you know when your favorite stores’ regular sales are, so you can save up your money and then stock up on some of your favorite looks for less.

• Buy some time. If you’re planning to shop in the same mall or retail area for a while, put the item you’re considering on hold for a few hours. Then walk around before you decide whether to go back to the store and buy it. Once you’re out of the environment and have had some time to think about your purchase, you may decide you can easily live without it.

• Scour secondhand stores. Thrift stores, vintage stores, and other secondhand shops are often treasure troves for the savvy shopper. Sure, you have to do some digging, but you can often find designer clothes and accessories at deeply discounted prices. Better yet, drop off some of your gently worn clothes, and you may get an even trade or come home with some extra money as well as extra clothes.

• Go generic. Most grocery stores offer generic or store-brand versions of everything from cocoa to cookies, even diapers and baby wipes. Often the quality is comparable; the generic or store-brand versions are just less expensive because they don’t spend much on design or marketing. If you pay out of pocket for medicine, you should also check regularly to see if generic versions of your prescription drugs are available yet. Under law, pharmaceutical companies must allow generic versions of their brand-name drugs to be sold after a certain period of time has elapsed. (Many health insurance companies now routinely require the use of generics, unless otherwise prescribed, in order to cut costs.)

Be a Fashionista (for Less)

It was essential to each of us that we not sacrifice our style for our savings or vice versa, and we’ve spent a lot of time brainstorming strategies to keep both our wardrobes and our wallets well stocked. In addition to the general advice listed in the section above, we’ve outlined our top ten tips below to help you stay fashionable and financially savvy:

1. Take inventory of your closet quarterly: The change in seasons is the perfect time to take stock of what you have in your wardrobe. You’re going to be rearranging your closet anyway, so why not assess each item as you do? Is it in good condition? Are you still excited to wear it? Is it still stylish or is it out of date? Does it feel fashionable or frumpy? Your responses will help you decide what to do with it.

2. Clear out the clutter: As you’re going through your clothes, shoes, and accessories, organize them into five piles: Save (split into two: As Is and Needs Work), Sell, Dump, or Donate. Hold on to only those items that still make you feel fashionable when you wear them. Some may need mending or updating; those go in the Needs Work pile. (Maybe a button came loose from a favorite blouse, or a heel needs to be replaced on one of your boots. These are easy fixes that don’t require a lot of money.) Sell items that are expensive or well made but don’t get you excited about wearing them anymore. You can post them on eBay or Craigslist or bring them to a consignment or secondhand shop. Dump those that have large holes or have been worn so much that they’re not worth salvaging. If an item of clothing really has sentimental value – like an old concert T-shirt or a sweater that your grandmother made for you – consider saving a patch of it in a jewelry box or scrapbook instead of letting it clutter up your closet. And donate clothing that’s out of date but in good condition or doesn’t fit you anymore. There are plenty of worthy organizations that accept gently used clothing, shoes, and small household furnishings, like the Salvation Army, Goodwill, and some Big Brother Big Sister facilities. You can also donate gently used business attire to Dress for Success, a non-profit that helps low-income women reentering the workforce. Or go online and look for other charities in your area, some will even come to pick up your donations. You won’t get money back, but your donation can help to lower your taxes. Clothing donations are tax deductible. Just don’t forget to document your donations carefully. Ask for a receipt from the charity estimating the monetary value of your donation.

3. Evaluate the essentials: There are certain items that every woman needs in her closet, no matter where you live. These include:
• a little black dress (simple and stylish)
• a classic button-up white shirt
• a pair of good jeans
• a rainproof coat (trench coats never go out of style)
• a pair of dress pants (black is best)
• a suit (either pants or a skirt and a matching blazer)
• a basic everyday bag (in a neutral color)
• a classic sweater (a V-neck, scoop neck, or cardigan that you can throw over your shirt when the temperature dips)
• a pair of black pumps
• a pair of boots (flat or heeled, dressy or casual, depending on your lifestyle)

If you’re missing any of these, put them at the top of your shopping list.

4. Build around the basics: Spend your money first on the essential building blocks of your wardrobe, like those listed above. These items should last for years, so it’s worth spending a bit more on them. In addition to the fashion fundamentals, there may be some pieces that you decide to buy or replace each season or every few seasons – from a winter coat (unless you live someplace warm) to a pair of boots to a swimsuit. As you shop to expand your inventory, think about additions that will pair well with your essential items (a top to wear under the suit, for example, or a wrap to wear over your black dress).

5. Mix & match: Each new item of clothing or accessory that you purchase should enhance your existing wardrobe. Before you buy anything new, ask yourself how many different outfits you could make by combining this new item with the clothes that are currently in your closet. Unless you’re buying something for a special occasion, like a wedding, you should be able to come up with at least four fabulous outfit combinations you could put together immediately after buying this item.

6. Know what’s trendy versus timeless: Once you’ve got lots of basic items that you can mix and match in your closet and hold on to for a while, you can start adding flair: fun clothes, shoes, and accessories that look cool now but may be past their prime by next year. Set aside a little money to spend on those trendier items that can freshen up your closet for the season. There’s nothing wrong with following fads. Just remember that they don’t last long; that’s why they’re called fads. So spend accordingly.

7. Don’t knock knockoffs: Within weeks of the major fashion shows, stores like H&M and Zara are already selling copies of the latest designer trends for discount prices. Since these styles probably won’t last more than a season or two anyway, it’s smarter to spend less on them and save more for those classic pieces that you can keep in your closet for years. These stores do a great job of capturing the look of the moment for less. They’re also great places to pick up simple T-shirts and trousers and accessories to mix and match with your better-quality basics.

8. Get luxury for less: You don’t need to drop a lot of money to own designer brands. Look for discounted merchandise at sample sales or used on eBay. Or see if your favorite designer is offering a less expensive line. Superstore and H&M have both paired with well-known designers, from Joseph Mimrar and Marimekko to Karl Lagerfeld and Stella McCartney. Many upscale retailers also have discount outlets (think Holt Renfrew’s Last Call in Toronto) that are often clustered together in outlet shopping centers. You can get some great bargains on luxury brands.

9. Share & swap: If you’re sick of your clothes, or you want a new look for a special occasion but don’t want to spend a lot, ask your similar-sized friends if you can “shop” in their closets. Or organize a swap. Each person brings a few good items of clothing that they’re ready to replace, and then you swap items with one another. Your friends often have a different sense of style, so it’s fun to try on the clothes that they brought. You might not have picked them out yourself in a store, but they may look great on you. Plus, this way you know your clothes are in good hands (should you ever decide you miss them), and you’ve got new clothes to spruce up your style without spending a cent. Sharing clothes with your friends is also an easy way to give your wardrobe a boost without spending money. We do it all the time. In just one year, we saved about $5,000 by swapping outfits instead of shopping for new clothes for dates, weddings, and work functions.

10. Avoid deadline or emotional shopping: If you wait until the night before a big trip to buy last-minute outfits, you’re sure to overspend. You’ve likely convinced yourself you need certain items, and as the clock ticks, you’ll become more desperate to have them regardless of the cost. Same goes for dates, weddings, or any special occasion. If you’re short on time, consider borrowing a few items from a friend instead. Or wear something you already have in your closet but buy a new wrap or a necklace to update it. Always have a backup plan so you don’t get stuck spending too much.

Emotional shopping is just as dangerous. How many times have you “treated” yourself to a shopping trip to try to lift your spirits? Though you may feel some elation right after you buy a new outfit, the trip often ends up having the opposite effect once you realize how much money you spent. Plus, you may find when you get home that the great new shirt goes with nothing in your closet. But you weren’t thinking about that when you bought it – in fact, you weren’t thinking at all. You were fueled by pure emotion. When you have moments like these, it’s time to enlist the help of your friends and money-group members.
Earn Extra Cash

Now that you’ve maximized your job earnings, it’s time to think about boosting your earnings outside the office. There are so many ways to make more money without making a lot more effort, just by thinking creatively. Here are a few Smart Cookie tips to get you started:

• Clean out your closets. Rather than throwing your used clothes away, why not find them a new home, where they will continue to be loved? Smart Cookies clear out their closets on a regular basis and often sell the shoes and clothing items at a consignment store, on eBay, or on craigslist.org. One of the Smart Cookies makes about $300 at the end of each season and puts that toward new clothes. Katie sold her wedding dress for $800 on craigslist.org. You can do the same with clothes – or toys – your baby has outgrown. Some grow so fast that they never even get a chance to wear all the outfits that their parents bought or received as gifts, and a toy may hardly be used if the baby isn’t interested. Another possibility? Donate the clothes or toys to charity and keep the receipt. You can write off the value of your donation when you do your taxes the next year and feel good about helping out those who are less fortunate.

• Clear out the clutter. Here’s an incentive to clean up your home: You can get rid of your junk and make money by having a yard (or a garage) sale. Team up with friends, family members, or neighbors and combine your stuff. Then you’ll have extra help running the sale and extra inventory to attract more buyers. And who knows? You might end up swapping items with your friends or neighbors.

• Sell stock photos. If people regularly ooh and aah over your Flickr pictures, maybe you’re destined for photographic greatness – or at least a few extra dollars. It’s easier than ever to get your photos out in front of the public. There’s a lot of competition, but there’s also a lot of demand. Marketing stock photos can be a convenient way for you to build up a secondary income stream. Try Fotolia.com, Dreamstime.com, Shutterstock.com, and bigstockphoto.com to upload and market your photos.

• Rent your parking space. If you pay monthly for a space in a lot or garage, but you know your car will be gone during work hours, you can rent out your space during the weekdays to someone who works near your parking spot. Advertise the space on craigslist.org or in your local paper. Robyn rented out her space and earned an additional $50 per month.

• Rent your home for use as a location for commercials, TV shows, or movies. You can register your home with film studios, production companies, and advertising firms, which maintain lists of properties available for shooting. Check out eHow.com for tips or flip through Opening Your Door to Hollywood, a 2006 book by producer James Perry, which offers a step-by-step guide to renting out residential or business locations. Daily rates can range from a couple hundred to more than a thousand dollars (even more if your home is used in a movie shoot). Andrea’s friend and her husband had just built their dream home and needed to furnish it, but they were short on cash after finishing construction. They decided to register their home with a production company for use in TV and films. After just two commercial shoots, they’d already earned $20,000! Note: Be sure to ask for a written policy on what the company does in case of any damage to your home.

• Be an extra. If you’ve seen the Ricky Gervais show Extras, you know that jobs for extras can range from print modeling ads to movie shoots. You don’t need a Screen Actors Guild (SAG) membership or even any acting experience to qualify – just the patience to sit on a set for hours and the flexibility to try out a lot of different costumes and lines. Pay can range from $100 to more than $1,000 a day. Check your local classifieds or contact a casting agency. (For a list of agencies visit www.idocommercials. com/casting/Canada.htm.)

• Help friends find better jobs. Internet sites like H3.com connects employers with prospective employees, many of whom are already employed and not actively job-hunting, via networking. The rewards for referring a candidate who gets hired range from a few hundred dollars to as much as $5,000. This is a great way to break into the recruiting business, with no overhead. Andrea connected with a recruiter who specialized in marketing. Since she had a lot of connections in that field, she referred many of them to the recruiter. She earned additional money from the referrals and helped some friends land great new jobs.

• Plan that perfect day. If you love weddings, planned your own, and/or have always wanted to plan a friend’s wedding, why not do it and get paid for it? Many people would hire a wedding planner in an instant but can’t afford the rates that a professional charges. Find out what a beginner planner would charge to get an idea of what is reasonable for someone at your level. Once you’ve built up some contacts, you might also consider party planning in general – first for friends and then for bigger clients.

• Get paid for your opinion. Companies often need focus groups, and market researchers need consumers, to test new items or to share their ideas about new products, shows, or ad campaigns. You can earn $25 or $200, depending on the project and the amount of time required. (Check out research firms in your area for upcoming panels and focus groups. Greenbook.org has a large database of market research firms and focus group facilitators, searchable by area.)

• Reap rewards for research and writing. You may have grown up taking the Internet for granted, but there are plenty of people who aren’t familiar with it or are too busy to spend time on it. If you’re skilled at extracting information through a web search, you can hire yourself out as an Internet researcher for professionals like lawyers and writers. Why not make extra money at something you are already doing? (Check suite101.com, craigslist.org, or the job postings on mediabistro.com, mediajobsearchcanada.com, and jeffgaulin.com.)

• Be an undercover consumer. Sign up for a secret-shopper program, where you can eat or drink out for free while rating the restaurant, or shop and rate the retailer. You can often bring a friend as well. Three of the Smart Cookies are secret shoppers and have found it to be a great way to eat and drink at some fabulous restaurants for free! Check out www.sensusshop.com for more information. There are no membership fees.

• Consider contract work. If it won’t conflict with your full-time job, seek out freelance or contract work in the same field. By networking, Katie was able to get additional contract work providing public relations services for clients outside her full-time job, earning an extra $2,500 a month! (Eventually, as we mentioned earlier, she was getting so many referrals and requests for her services that she left her job to open her own PR agency.) Robyn learned about a project seeking registered social workers through the Board of Social Workers newsletter in her area. She was hired on contract for a project in which she made extra money meeting with and interviewing people who wished to adopt children – on her own time, outside her regular job.

Turn Your Pastime or Your Passion into a Paycheck

Do you spend most mornings exercising? Take a basic trainer’s course and start training friends and family at your local gym or at home, where you can charge hourly. Not only are you keeping fit, but earning extra money while you’re at it. Andrea’s friend Erin, a preschool teacher struggling on a low salary, turned her passion for fitness into extra earnings by becoming a personal trainer. In a year, she was able to increase her income by 20 percent and stay healthy and fit.

Of course, you don’t need to be a fitness trainer, but chances are you already participate in some pastimes that could make you money. In your notebook, make a list of at least five activities that you really enjoy doing, like shopping, knitting, walking your dog, or even drinking wine. Now spend some time brainstorming about ways you could make money doing any of these activities.

If you like shopping, for example, you could earn extra money working as a secret shopper on the weekends. Or you could take a part-time job at your favorite store – many retail stores hire extra employees to help out during the busy holiday season between Thanksgiving and New Year’s. Not only will you earn more money but you’ll get employee discounts on items you’d probably buy anyway (and save money on holiday gifts). Like knitting? Why not knit sweaters, scarves, or gloves and sell them to friends or give them as gifts on birthdays to save money. If you enjoy walking your dog, ask around to see if your neighbors need their dogs walked. You can make extra money walking theirs as well. Enjoy wine? Look for part-time work at your local wine store, or sign up for wine-tasting classes and see if the instructor needs an assistant at future classes. Many wine shops offer tastings and classes and might be able to use an extra pair of hands in exchange for free wine or a little money. That’s exactly what Andrea did. One of her former colleagues started a business that offered wine tastings at company events. Andrea offered to help out. It was a great opportunity for her to make extra cash, sample some wine, and meet new people.

If you enjoy playing basketball or soccer, consider coaching. If you are already taking classes in yoga or Pilates or dancing, consider training to become an instructor yourself. Or see if there are jobs available at the studio on the weekends or evenings – manning the front desk or helping to set up equipment, for example – in exchange for free classes. With a little effort and ingenuity, it’s possible to turn almost any pastime into a paycheck.

From the Hardcover edition.

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