It isn’t easy to say “no”…especially when the deals and offers seem so appealing. The problem is that many people live in the now and don’t think about what the future may hold. Spending money today will definitely affect how much you have in the future. You need to consider everything and realize how much you are spending before it is too late.

There are times where it might seem great to say “yes” now, but you need to consider the future repercussions and make your decisions based on the whole picture.

1. Would you like to open a tab?
This one will get you every time! Yes, it is easier to open a tab at the bar but it isn’t always the best decision. To be safe, take out as much cash as you want to spend that night and only use that. Leave your credit cards at home if you don’t feel as though you have the will power to say no. Sometimes tabs can get mixed up at the bar and you can end up paying for someone else’s drinks. If you always want to use your credit card, don’t open a tab but pay and sign every time. This may seem like a huge hassle, but at least you can watch how much you are putting on your card.

2. Do you need a cash advance on your credit card?
Unless you are in desperate need for cash, taking a cash advance on your credit card is a bad idea. The problem is that many times some younger people don’t always understand what taking a cash advance may mean. Typically, cash advances on your credit card come with a great deal of interest (and usually that interest starts as soon as the cash is removed from your credit limit).

3. Would you like to save 10% today by opening one of our cards?
Store credit cards are the worst kind. Not only do they usually hold a higher interest rate that regular credit cards, but it is easy to forget about them. Keeping track of all your bills can be overwhelming at times and sometimes store credit cards are overlooked because they don’t seem as important. Also, opening credit cards that you might forget about can hurt your credit score as well. Although the 10% off your purchase may seem like a great deal at the time, it isn’t worth it in the long run.

4. Want to go out for some drinks?
If you do not have a great deal of money to spend on drinks, ask your friends if they wouldn’t mind hanging in for the night and having a few drinks at your house. 2 drinks at the bar can cost you $20 depending on where you go, but if you stay at home a whole bottle of vodka or tequila (whatever your alcohol of choice may be) can cost you the same amount. I’m not suggesting that you always say no to going out with your friends because obviously that won’t happen, but if you feel yourself in a crunch for money I’m sure your friends will understand and wouldn’t mind having a few people over instead.

5. Do you want to cash these checks?
Unless you need the cash right away, put the money into your checking or savings account. You spend much more cash when the money is right there in your wallet than when you actually have to go to the ATM to take more out. Try to put as much money as you can into your bank account in order to keep track of how much money you are spending and where it is going. Cash disappears so easily, make it a little harder for you to spend (even if it might be a little bit inconvenient).

All of these questions are situational and vary person to person, but if you are questioning your decision about doing something it is probably best to not do it. Spending money and avoiding bills will just put you in a worse position for the future. Stay on top of your credit cards, budget, and spending with Geezeo to make sure that you are giving the correct answer when asked these types of questions.

Photo: Iván Melenchón Serrano

It is not always easy to cut costs when times are tough especially if you have gotten yourself into routines. Cutting costs by doing a little extra can take a long time to get used to. However, in the long run, spending the additional time can save you a lot of money. If you have the ability to be flexible, you should definitely check out some of these ideas on how to save on everyday costs.

Eliminate Unwanted/Unused Features on Your Cell Phone Bill
Often people pay for features that they never use. You can eliminate these costs by checking in with your cell phone company to see whether you are able to remove them. Doing this can save you a lot of money each year. I was paying $5.00 per month for the ability to make long distance calls to England to keep in touch with my family. But once I discovered Skype I realized this was a huge waste of money. Eliminating things off your cell phone bill may be one of the easiest ways to reduce your costs, you just have to take a little time to make the call or stop in at your carrier’s store.

Another way to reduce costs that are related with your cell phone bill is to check and see if your company has a deal with your carrier. Some big companies offer their employees discounts if they let their cell phone carrier know that they work there. This deal can usually save you somewhere between 10 – 20% on your bill each month.

Buy Only What You Need at the Grocery Store
This option is not for everyone but it definitely does work. If you are only shopping for yourself (and possibly one other person) it is best to only buy a few things from the grocery store every time you go. I found that if I made big purchases at the store each time I was throwing away a lot of food that was no longer good to eat. This isn’t necessarily the case with frozen foods, but if you are buying fresh vegetables and fruits you always want it to be as fresh as can be. It is just a waste of money to continually throw food away and may be much cheaper for you to venture to the grocery store more often.

Use Coupons!
A lot of people don’t like the hassle of using coupons, but the truth is it can save you a lot of money every time you shop. There are clothing stores such as Express that I will only shop at when I have a coupon. I love their clothes, but I find that I receive coupons so often that purchasing clothes there without a coupon is a huge waste of money. Also, with grocery stores and places such as CVS, not owning one of their store cards is also costing you money. There are no fees with these cards, you don’t have to pay for them, and they offer great coupons! CVS especially is great at giving you money back to spend on whatever items you may need. Check out some other great Cost Cutting Secrets from Coupon Mom at MainStreet.com.

Make Your Own Coffee
Buying a coffee at work or Dunkin’ Donuts may only cost you about $2 (or more) per day but you need to think of this on more of a long term basis. To me, $2 per day seems really cheap when purchasing my coffee, however it really does add up more quickly than you think. $2 per day = $10 per week = $520 per year. That’s a huge amount of money! If you factor in the point that many people buy more than one cup of coffee a day…plus sometimes lunch…you are looking into huge amounts of money that could have easily been saved and spent on something else. I know that it isn’t always easy to make your own coffee when you are running out of the house in the mornings, but invest in a cheap coffee maker that has a timer that you can set each night before you go to bed and when you go downstairs in the morning your coffee is all ready to go.

Photo: Jane M. Sawyer

Many times young adults just entering the workforce aren’t getting paid as much as they would have hoped for. For this reason some are not looking into their company’s 401(k) offerings because they don’t want to start saving money that they shouldn’t touch for about 40 years (at least). When you are young you often get caught up in the “here and now” and forget about the future. However, preparing yourself for your future is one of the best ways to start off your career.

According to Schwab Center for Investment Research, young employees in their early 20’s should be saving about 10% - 15% of their paycheck into their 401(k) if they want to be prepared for the future. However, the average rate of savings among this generation is only at about 6% (not nearly enough).

Here some top reasons that you should start a 401(k) ASAP:

1. Tax Benefits

The money that you are putting towards your 401(k) comes out before you are charged for taxes. This way although you cannot touch the money (or shouldn’t touch the money) until you are ready to retire, your income is getting taxed less than it would if you were not putting money towards your 401(k).

2. Company Matching Contributions

If you find yourself in a bind for money right now, at the very least try to contribute as much money as you can so that you can benefit from your company matching contributions (remember: every penny counts!). Many companies give their employees a match on their retirement savings. This means that if you contribute $1 towards your 401(k) often times your company will match you 50 cents per dollar up to a certain percent of your contribution (usually 3%-5%). This is money that you are getting just for investing in a 401(k) and carries with it no risk.

3. Preparing For Your Future

This is one of the biggest reasons that a 401(k) is important. When you are in your 20’s, retirement seems light years away. However, time goes by so quickly that it will be here before you realize how much time has gone by. Putting off investing in your 401(k) won’t benefit you in the long run. With the market currently the way it is, people are afraid to invest in anything, but eventually things have to turn around and you will be happy that you were saving while you were young.

4. Target-Date Funds

Under this, your 401(k) automatically maintains a diversified portfolio of stocks and bonds. For many employees who do not completely understand the market and are too afraid to take big risks and lose their money, a target-date fund may be useful. However, our partners at MainStreet.com suggest that target-date funds are not always as easy as they appear and might still involve some risk. Check out the full article here to learn more!

Don’t let not understanding your 401(k) be a reason to not invest in this saving initiative. Ask your company for help in further understanding what your 401(k) has to offer and do your research online as well. If you do not take the initiative to understand your 401(k) and your future you may find that you are in a bind when your retirement time arrives. Even if you feel too young to start saving, it is always better to be safe than sorry. Knowing that you started to put money towards your future when you were young will be a big weight off your shoulders as the time approaches for you to retire.

Photo: Michael Connors

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The unemployment rate is at a high right now and people are worried about keeping their jobs. But on top of this worry, they are also concerned about finding enough money to pay for the necessities. Electric, heat, credit card bills, cell phones, groceries, rent…it all costs so much money, but where can you find enough money to pay for it all?

Some people do not like their first job and can’t even imagine having to deal with a second one as well, but the truth is, many people work more than one job to supplement their primary income. It may only be on the weekends or nights, but the extra income helps people when they really need it.

Are you wondering if you too should consider a second job?

Here are some signs that might lead you in the right direction…
1. When your paycheck is deposited it never seems like enough money.
2. You only ever pay off the minimum payment on all your credit card bills.
3. You can’t seem to pay off your student loans.
4. You are constantly overdrawing from your bank account (and then having to pay big fees).
5. You want to go out to dinner/drinks and not always put it on your credit card.
6. When your paycheck comes in you already know that it won’t be enough.
7. You hate going to work every day but stay because you know you need the money.
8. You can’t afford to set aside money each paycheck to enroll in a 401(k) plan.
9. You aren’t able to go out when you want to because you don’t have the money to fill your gas tank.
10. You are constantly taking money out of savings instead of putting money in.
11. You feel like you are always asking friends/family if you can borrow some cash.
12. You just want a little bit of money to spend on yourself now and again (very important)!!

It is not uncommon to have a second job so don’t think that it is always a bad thing. Yes, it takes away from some of your free time, but if you find a job doing something you love, it might not seem so bad. If you like gardening look into your local garden center…or art, look into an art store. It isn’t always ideal to have a second job (and some of you might not even be able to do it because you need time for your kids or family, etc.) but in the end you might find yourself much happier (and less stressed about money) with the additional source of income.

Also, the signs above might not be the case for everyone. Everyone goes through life differently and has their ups and downs. You might find that you stress about some of the above but really, a second job isn’t for you. That’s fine! Everyone has their own way of dealing with different situations in life. Just know that if you do look into a second job to supplement your primary income that you aren’t the only one out there feeling the pinch right now!

Photo: Runron

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With the economy in its constant ups and downs, retailers are definitely suffering. With the winter season and Christmas quickly approaching many stores are meant to be putting out their fresh inventory to target the colder weather. The problem is that many stores can’t seem to empty out their inventory from the fall.

What does this mean for you as a consumer? Usually, great deals! However, with everyone struggling the way they are right now, it is important not to spend just for the sake of a deal. In the end, if you don’t have the money on hand, charging it to your credit card to pay off at a later date is definitely not the right decision to make. If things with the economy get worse, you may see yourself with a huge unwanted credit card bill.

Here are some important questions to ask yourself while shopping:

1. Do I really need this?
Let’s be honest, many things we buy as consumers we never really NEED, but you should definitely prioritize your spending. Make sure you have left room in your budget for the necessities before you spend on things you want (i.e. groceries, prescriptions, electric/heating bills, etc.) A new pair of shoes doesn’t typically fall in the list of things you need, unless of course you have none to wear!

2. Will I wear this more than once?
Sale items are always very tempting but are also usually impulse buys. Although a pair of jeans for $19.99 is very tempting, if you are only buying them for the price but don’t think you will wear them more than once then what is the point? Make sure you are going to get the most out of what you buy. You don’t want to be stuck with a bunch of unwanted purchases just because they were on sale at the time.

3. Do I have something similar to this already?
Consumers tend to repeat purchases because they like the same things. However, a black t-shirt is very similar to any other black t-shirt that you might already own. If you are in a crunch for money, don’t spend on things that you might already have. Do laundry more if you love that black t-shirt so much, but it is a waste to double up on something you already have (or something that looks almost identical).

4. Is the brand name worth it?
Yes, usually brand names carry quality with them as well…but they also have a hefty price tag! Consider places such as TJMaxx, Marshalls, Burlington Coat Factory, Loehmann’s and other such stores that sell a variety of your favorite brand names for a discounted price (usually 20% - 60% less than a normal retailer would charge). If you really need that brand name, these places are a great place to find them.

There are many other questions that you should consider, but this is a good starting point. Don’t spend money just for the sake of spending it. If you don’t have it, it is better to wait until a time when you do. Shopping is fun, but you don’t always have to buy. If you feel like to purchase things just for the sake of it, leave your wallet in the car and do some window shopping instead. It is always better to have saved your money than regret it at the end of the month when your bills come in.

Photo: Álvaro Daniel González Lamarque

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Many people are finding themselves cutting costs wherever possible throughout their everyday life. The fact of the matter is that cell phones have become such a vital life line and everyday necessity that nobody is willing to let go. Who knew that a technological invention that has now been around for years would cost us so much money in the long run!

You have to be smart with your cell phone usage and figuring out what works best for you, otherwise you will find yourself stuck with a huge bill at the end of the month.

1. Do Your Homework – This may sound silly because all major providers offer nationwide coverage right? However, not all of them offer equal coverage in all areas of the country. You want to make sure first and foremost that your cell phone will have great service in your house. Many people don’t have land lines anymore, but there are still some that didn’t check their coverage and are stuck with horrible reception while at home. This defeats the purpose doesn’t it? Also, if you travel a lot for work (or pleasure) you want to figure out what cell phone provider offers the best coverage to the places you travel. The same goes with international travel or calling. If you don’t do your homework, these regular fees will add up quickly!

2. Limit Text Messaging – I know this is hard, but really these additional costs will kill you. If you cannot get unlimited text messaging for a decent amount of money, then you should probably just cut back on the amount you text. Realize that it is not just outgoing text messages that you are charged for, the incoming ones count too! Many people don’t realize that they are sending/receiving so many messages until their bill comes in the mail. Try to avoid having a full out conversation through text messaging unless they are free. It will be must faster (and cheaper) if you have a few minutes left on your phone to just pick it up and make the call.

3. Be Nice to Customer Service – According to an article from our partners at MainStreet.com, just being courteous to your providers customer service calling center can benefit you a great deal. As the article states, “Place yourself in the shoes of a customer service agent who are you likely to help: The person that shrieks or the person that is warm and friendly.” It makes sense right? If I was a customer service person I would definitely block out anyone that was yelling at me. It is much easier to talk through your concerns about your cell phone bill than to get into an argument with your only lifeline on the other end.

4. Monitor Your Account Online – Just like you do with your bank account, check your cell phone account online as well. I think many (if not all) providers allow you to check your account online as well as pay your bill. It is simple to go on and check where you stand with your minutes and your text messaging before you go over your allotted amount. It is so simple, takes about 5 minutes out of your day, and doesn’t cost you anything. It beats guessing how many minutes and messages you have left just to be completely off when your overly large bill arrives.

5. See What Other Providers People Have – Many providers today offer free in-calling to people who have the same provider as you. I know often times you are “stuck” in a 2-year plan, but if you realize that all of your friends have Verizon for instance and you still have Sprint, consider switching in order to save yourself some money. Or, work out a family plan. If you have recently gotten married or gotten your kids cell phones, make sure you are utilizing a family plan (regardless of how much your kids may want a different provider). This way you are typically paying much less money to have other people attached to the same plan.

When money needs to be saved, there is no point in spending extra for things like picture text messaging and the internet unless you absolutely need it. I know many people who got BlackBerry’s just because they wanted them, not because they needed them for work. Although this is great and if you have the money, go for it! But if you are looking to save, consider cutting out some of the extravagant accessories and additions to your cell phone bill that you do not use every day. You might be surprised how much doing this and utilizing these easy suggestions will save you in the long run.

Photo: Mary R. Vogt

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This concludes our personal finance articles today on the topic of “poverty”. Here is one about the lack of basic financial education at the high school level. Fighting poverty with education is another tool we need to embrace. (-Editor)

By Jeffrey Strain | MainStreet.com

Most high school students would jump at the chance to take a course called “How to Retire Early as a Millionaire.”

Forty states include personal finance to some extent in their educational standards or guidelines, according to the National Council on Economic Education. On the surface, this makes it seem that educators in most states realize that high school grads should have a basic understanding of personal finance.

If you dig a little deeper into the numbers, you’ll find this is not the case.

The actual implementation of personal finance into high school education is dismal. Only nine states require a course with personal finance content to be offered and only seven states require students to take a personal finance course in high school to graduate (Georgia, Idaho, Illinois, Louisiana, Missouri, South Dakota and Utah).

If you are looking at real-world life and what it takes to get ahead, what you do with the money that you earn when you are young can determine whether you live your life financially secure or paycheck to paycheck.

After graduating and beginning to work is when people should be making quality personal financial decisions, not when they should begin learning how personal finances work.

Here are eight subjects that aren’t taught in high school:

1. Realities of Credit Cards

Lack of understanding of how credit cards work causes far more financial problems for people than should ever happen. Credit cards aren’t evil, but they can seem that way if you don’t know how to properly use them.

When you already have a credit card is not the time to be learning how they work, unless you want to receive some extremely costly lessons. Teaching people in high school that using a credit card is not using free money and comes with a huge cost over time would keep a lot of people from the early personal-finance disasters these cards can cause.

It would also help reduce the vast amounts of credit card debt that Americans continue to rack up.

2. How to Budget

One of the first places people get into money trouble is not knowing how to budget. Not knowing how you spend the money you earn is nothing more than inviting financial disaster. Learning how to set up a basic budget and stick to it can be the difference between being financially secure and running up large amounts of debt.

3. The Importance of Saving

The importance of saving and creating an emergency fund cannot be overestimated for basic personal financial stability.

It’s not the everyday things that get most people into trouble, but the unexpected events that happen in life that cost more than anticipated. Learning to prepare for the unexpected can mean the difference between going into a debt spiral or escaping financial emergencies with your finances intact.

4. The Meaning of Frugality

In the consumer-driven world, there seems to be nobody teaching the importance of frugality. Frugality is often ignored or even scorned, but it is a sure way to personal-finance success.

Learning to make the most of what you have, to get a good value in all that you buy and to not waste when not necessary are lessons that would help every young adult handle their finances better.

5. How to Invest

The earlier people start investing for their future, the easier it is for them to reach their financial goals due to the magic of compound interest. Understanding the basics of investments and learning where they should be placing their money should be understood when they leave high school rather than having to experiment as young adults.

The time to know about investing is before you have money to invest rather than by trial and error when receiving a paycheck.

6. Basics of Real Estate

Understanding the fundamentals of real estate and how different mortgages work is extremely important as many are finding out with the current subprime mortgage meltdown.

A good grasp of what is important when purchasing real estate and how different mortgages work rather than whether you can make the monthly mortgage payment at the time of signing it would have saved a lot of people their homes.

7. Retirement Issues

The first step that any new employee should do when joining a company is to join the 401(k) plan they offer up to the match, since not doing so is essentially throwing away free money.

Yet since high school doesn’t teach this, many young adults do exactly this. If schools taught high school students how easy it is to become a millionaire if they only begin saving for retirement early through 401(k) and IRAs, many more would embrace saving and investing early.

8. Finer Points of Entrepreneurship

When it comes to financial security, putting all your eggs in one basket contains a lot of risks. In today’s work environment, there is no guarantee of lifelong employment. Learning basic entrepreneurship and building a part-time business on the side is something that everyone should do for both the income and tax benefits.

Schools should not only teach the basics to be able to work for somebody else, but also how to work on your own if you choose.

Our series today as part of Blog Action Day ‘08 for poverty awareness:

Poverty Among Women Increasing During Retirement – 4 Tips to Help Prevent this Happening to You!
4 Ways Poverty Impacts Your Personal Finances
Uninsured? 3 Steps To Take
Cramer: How to Avoid Being Poor
2 Questions to Ask Yourself Regarding Global Poverty

Thank you for reading.

With the economy currently in a recession, it is not uncommon to hear about older generations that are already in retirement losing their homes or not having enough money to live off of. It is extremely sad and heart wrenching to hear these stories but there may be some things that you can do to prevent these unfortunate occurrences happening to you.

Even today, women are more affected by poverty in old age than men. Why? – Women live about 5 years longer than men. Although this may not seem like that long, it adds up quickly when money is involved. Not only do women live longer, but they are also in retirement for longer. According to MSN.com, women retiring at the age of 65 have about another 20 years of life where men only have about 17 years.

So, what can you do to prevent yourself from falling below the poverty line in retirement? These four easy suggestions may be a good starting point.

1. Don’t Count Solely on Social Security – We have seen recently how much money people can lose when the economy takes a sudden turn for the worse. Make sure you are taking full advantage of a 401(k) that may be offered by your company and also set up a separate retirement account for yourself. Social security is too financially unstable to depend only on that. You can include your social security in some of your calculations, but make sure to consider that this may not be 100% guaranteed in the end.

2. Educate Yourself – You want to be as knowledgeable about your own finances as you can get. This way when you find yourself in a tight spot you can find ways to work your way through it until things look up. According to an article on MainStreet.com, women are often times overwhelmed by financial information. Make sure you are taking the first step in the right direction. If need be, ask for help!…You can always find great information in our Geezeo Blog or Groups such as Ask the Expert: Farnoosh Torabi and Penny Pinching To Early Retirement where people might be able to answer your questions and offer advice (for free!!).

3. Set Up Your Health Coverage – Make sure you are all set with your health insurance and possibly look into long term care before you enter retirement. Medical costs add up quickly and you don’t want to be caught without coverage. If you have a spouse make sure that you have this discussion with one another to make sure you are both covered. Don’t go without! Although at the beginning of retirement you might think you are okay, as time goes on little things can start happening and the costs can add up. Better safe than sorry!

4. Work For As Long As Possible – I know that many people like to take the time off to be with their children and grandchildren, but the fact of the matter is, the longer you work the more money you can put towards your 401(k) which will definitely help you in the long run. Even if you can’t stay with your full-time job, work part-time at something you think you might enjoy. Although this may not contribute to your 401(k) it will still bring a little bit of income into the house and as we all know – every little bit counts!

The statistics for women in retirement are grim. Women are 71% more likely to live below the poverty line than men in retirement. Take these suggestions into consideration and hopefully we can lower than percentage and fewer women will be affected by poverty in their “golden years.”

Photo: Jane M Sawyer

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There are many things that we probably shouldn’t do with regards to our money.  For instance, spending money without keeping track, not having a budget, or splurging with credit cards we can’t afford  to pay off are all things that could cause problems financially.  But what may be some of the not so obvious ones that can easily burn through our money and possibly even make us feel guilty afterwards?  No, it’s not that occasional Starbucks you splurge on and not tell your significant other about.  (Although, that may be an area that can still make you feel a bit guilty.)

No, these are things that you may pay for every month, and not even think twice about them.  Or maybe you do, but it’s not until the middle of next month.  Then you realize that they weren’t really necessary to begin with, and wonder why you paid for them.  These may also be things that cause you to not do what you should be doing.

Jay White, founder of Dumb Little Man, wrote about such financial expenditures that often times “fly under the radar.”

The first one he mentioned was Subscriptions.  This could be magazines you get because you might find the time to read them at some point.  Or HBO Channels that you may think you need in order to see one or two of your favorite shows.  Jay asks a really good question here:

“Are you still as excited about the purchase as you were on the day you signed up?”

He goes on to say:

“If not, ask whether you really need the item in your life or if you are willing to continue paying the monthly or annual fee. Remember, this is more than magazines and cable TV. Consider gym memberships, website forum memberships, cell phone data plans, the Wifi card subscription you don’t need at Starbucks anymore, etc.”

So it’s time to sit down and really calculate all of these subscription costs and see if you can find better ways to use the money.  Remember too, when it comes to magazines, if you still want to occasionally read them, you can most likely find them online now.

Jay continues on to mention two things that many people struggle with.  The first one is procrastination.  You don’t want to put off doing today what you think you will have time to do tomorrow (but most likely won’t be able to fully complete).  Jay suggests setting up an “automatic withdrawal that goes into a savings account not attached to your checking account. If your income level allows for it, put some cash into a Roth IRA, etc.”

The other thing Jay mentions is the act of making assumptions.  “You have to plan your finances in a way that will all but guarantee your needs are met. If you do get a windfall or if Social Security exists in five years, you need to treat that as a bonus. You can NOT rely on anything that you don’t personally control.”  Websters dictionary links assumptions with arrogance.  Therefore, if you do not plan for your future on your own, one could almost claim you to be a bit arrogant, or that you feel like you are superior to others, and deserve to be taken care of in the future no matter what you did or did not do prior.  However, that is why there are options in place now that allow you to save for later on down the road.

Don’t assume tho that it is too late to start.  In fact, if you want some advice on trying to get started with your retirement savings, check out one of our many groups, such as Investing For Our Future.

Jay gives many more good examples of areas we could improve on that goes deeper than just spending less than you make, or only using credit cards when you can pay them off.  Check them out and see if there are any areas in which you could improve and possibly save money now and for the future.

Related:
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Saving For Retirement During a Recession

By Michele Steinberg, FinanceGrrl

Photo: Dani Simmonds

In these strenuous economic times, it could be advantageous for savers and investors to take another look at gold.  A brief primer on the gold standard:

•    The Coinage Act of 1792 established one United States Dollar as consisting of 371.25 grains of pure silver, but was soon after replaced with a gold dollar consisting of 25.8 grains of gold.

•    From 1900 - 1933, after the passing of the Gold Standard Act of 1900, gold was coined by the US Mint, and our paper currency was tied to the amount of gold held in the US Treasury reserves.

•    In 1933, as response to the Great Depression, Franklin Roosevelt required all people exchange their gold coins for money that was not redeemable in precious metals.  Gold was taken out of circulation and kept by the government in the form of bullion.

•    In 1971 Richard Nixon signed a policy that took the US dollar off the gold standard in its entirety.

The simplest result of the loss of the gold standard is that when the dollar is weak, gold is strong.  As it stands today 1 Troy ounce of gold is worth well over $800 – closer to $900.  That’s bad for the dollar, but good for gold.

Why should you invest in gold?

1.  Supply is low and demand is high
In September of 2008 the US Mint ‘temporarily’ suspended sales of one-ounce American Buffalo Gold Coins, confirming that “demand has exceeded supply.”  Kitco.com of Toronto has been forced to stop selling “until further notice” one- and ten-ounce Gold Bars.

There are currently somewhere between 120,000 and 140,000 tonnes of gold ‘above ground’ in the world. About 30,000 tonnes of the world’s gold [20-25% of above ground inventory] is held in central bank vaults belonging primarily to the USA, Germany, IMF, France, Switzerland and Italy.

Gold is difficult to find in commercial quantities. Gold mining takes a long time (between five and ten years) which presents a struggle for supply to keep up with demand.

2.  The risks are comparatively low
Ownership of physical gold has no need for the FDIC.  Keep it in a safe, secure location and if (God forbid) all the banks in the country fail, you have no need to worry about your investment in gold.

Compared to bonds gold has no risk of non-payments; or compared to stock there is no risk of a company going out of business.

3.  It has real value
Gold can be purchased in mutual funds and exchange traded funds that invest in bullion, such as Central Fund of Canada (CEF) or it can be purchased in the form of actual coins.  Coins are an interesting investment as they have an intrinsic numismatic value for collectors as well.

A recent poll of the London Bullion Market Association resulted in an estimate of gold prices increasing to $1,200 in 2009.  If you have extra funds to diversify your portfolio, now could be a great time to get into gold.

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