Understanding ISA

ISAs are a popular type of savings account that is used by millions of people in the UK. However, if you have never had one before, you may not be entirely familiar with what ISAs are and what they do. Read on to find out more about understanding ISAs.

What are they?

‘ISA’ stands for individual savings account, and the aim of ISAs is to allow everyone to save a certain amount of money every year tax-free. This means that while you normally have to pay tax on the interest you earn on your savings with other types of savings account, this isn’t the case with an ISA.

What are the main types?

There are two main types of ISAs: the cash ISA and the investment ISA.

Cash ISAs allow you to save less than other types of ISA but all of the money you save in the account is guaranteed and you can access it whenever you need it, which makes these accounts very popular with a lot of people.

Investment ISAs commonly take the form of a stocks and shares ISA. This type of ISA allows you to save more money every year, which can be appealing for anyone looking to maximise their tax-free savings. Most shares ISAs are linked to the stock market – often carefully-selected FTSE 100 companies, but other high performing listed companies can also be chosen, such as those that have a good track record on the environment.

How much can you save?

There is an annual limit on ISAs, which changes every year so it is worth keeping an eye on this to make sure you are getting the most out of your ISA allowance. For the current tax year (2011/2012), you can save up to £5340 in a cash ISA.

For a share ISA, you can save up to £10680. There are two options related to investment ISAs in terms of how you save your money. One option is to save the total amount in the form of stocks and shares investments. Your other option is to save half in the form of shares and half as cash.

What are the risks?

It is important that you are aware that there are some risks attached to investment ISAs. This is because their performance is dependent on the market and so, while there is very good potential for you to receive very good dividends, your investment can also go down as well as up. However, if you look around for the best stocks and shares ISA, it should be well-managed and so risks should be kept to a minimum.

Also, it is advised that you plan to save in your stocks and shares ISA for the long term to give it the best possible chance of performing well. You could also consider a gilts and bonds ISA if you prefer, which has less of a risk attached but can still offer good returns.

Overall, make sure you do your research to make sure you choose the investment ISA you think would be best for your needs.

Work From Home: 5 Ways to Earn Extra Money

Times today are tough, so whether you’re a student, a stay at home mom, or an employee whose hours got just reduced, the chance to make money would be a blessing. Blessings don’t always have to be God sent; they can also be man made. Effort and initiative goes a long way, so if you want to make extra money from home, here are 5 ways to generate additional income:

1. One effortless way to make money from home is by the sales of items you have around the house. Aside from holding a garage sale, you can also post household items you want to sell on online sites such as EBay. Using an online site promotes your sale to a wider audience than just your neighborhood. Due to the tough economy, you don’t want to just get rid of unnecessary or unused clothes, furniture, books, or household appliances. By auctioning off your items, people who’re looking to spend less will also stand to gain. Check out Cash4Books.net; it pays well for newer hardcover books or textbooks.

2. Online writing is the right direction if you want to earn extra money from home, or even if you want to work full-time as a home based writer. Several sites such as eHow, Bukisa, and Hub Pages welcome well-written articles from contributors. Blogging is also a great way to make money; you can launch your own blog. In order to do so, you would require a good topic, research, and dedication to pull it off.

3. A lot of work can be done online, even if you aren’t a writer. If you’re a teacher, you can earn money tutoring people online at such sites as Tutor and ETutor. You also don’t have to be a teacher per se, just an expert in a certain field.

4. In line with online work, several sites also offer professionals from different industries (from web and software development to customer service) a chance to earn extra income. Check out Craigslist for job postings or register with oDesk to find part-time or full-time work.

5. Make a business from your skills and hobbies. If you like to bake or cook, you can sell these to neighbors, friends, and even your co-workers, thereby making a tidy profit. If you’re good with your hands and like to make crafts like handmade jewelry, decorations, or even personalized t-shirts or mugs, you can post these for sale online in Facebook or take orders in person.

There are many opportunities to make extra money from home, especially if you know where to look for opportunities online. Networking is also a very important skill to utilize; this enables you to market whatever products or skills you may offer to others in order to earn additional income.

One word of caution, especially when working from home: there are many scams that take advantage of the popularity of working from home, so check the companies or sites you are thinking of working for. Nothing ventured is nothing gained, but also be wise about where you put your time and effort.

When Buying the Expensive Version Can Save You Money

Usually buying the expensive version of a product or service would seem counterintuitive to saving money. In fact, being frugal doesn't seem to have any link whatsoever with indulging on expensive things. Let me explain why there is a connection and why it's not as tenuous as you may think. No, I'm not leading you down the path to selling your house and moving all your stuff into StorageMart. What you're about to hear are actual ways in which buying the expensive version of something can save you money:

Buy a fuel-efficient electric or hybrid vehicle: While the upfront cost of a hybrid is comparable or a bit more than a new gasoline powered car, the money you save on fuel and emissions updates will even out the costs. Depending on the year and model of the hybrid you buy, you many even wind up saving more money in the long haul. Also, you'll be helping the human race save money on cleaning up the environment.

Buy high-quality coffee beans: Stopping by your favorite coffee shop every morning can easily lead to a monthly tab of $100 - and that's assuming you don't also need a caffeinated pick-me-up throughout the day. By buying high quality coffee beans, which run about $15 a pound, you will be able to reduce your monthly coffee bill to about $30 by bringing your own coffee from home. Another reason to buy high-quality beans is that they will keep you riding a more potent, smooth wave of caffeine exuberance, making you need less coffee throughout the day. So invest some of your scratch into top-notch fair trade beans and save yourself money.

Buy appropriate car insurance: Sometimes opting for the more inexpensive option can not only be risky, but downright financially life threatening, and buying car insurance is one of those instances. Getting inferior coverage in order to save $10 a month is not a smart move. If the worst case scenario happens, in which you and the other drivers' cars are totaled and people are injured, you're going to wish you had full coverage on injury and collision for all parties. It could be the difference between a few hundred dollars on a deductible vs. tens or even hundreds of thousands on repairs and surgery costs.

These are just a few of the instances in which buying the expensive version of something can save you money in the long run. Spending more upfront on a product or service is not always prudent, but in some cases it's the right move.

How to Save Money on Your Taxes

With the holidays over, many are looking for quick ways to recover from the excessive spending brought about by the holidays. While refusing to leave the house for the next 3 months and pulling out title loans are always options, they aren't always the most fun or feasible.

Instead of living life to the frugal extreme, many quickly file their taxes so that their refund can get their savings back in the black. However, simply filing your taxes isn't always wise. An improper file can actually cost you thousands of dollars. So before you file, see if you can't write a few of these deductions on your taxes to increase your refund:

Charitable Contributions

You don't have to donate money in order to write off dollars under charitable contributions. In addition to any monetary contributions, you can also write off a percentage of your mileage spent while driving to and from your volunteer destination.

Moving Expenses

If you've had to move for a job in the last year, you just may be able to write off those moving expenses. As long as your new residence is over 50 miles away from your previous residence, you can write off the moving vehicle, gas, and many other moving expenses to increase the amount you can get back.

Student Loan Interest

If you are paying on those student loans still, you may be eligible to write off the interest paid on those loans. In order to be able to write off the interest paid, you have to have paid more than $600 and you should receive a 1098-E form from your lender with the exact amount of interest paid that you are allowed to write off.

Job Searching

If you are like countless Americans, there is a good chance that you spend time job hunting. While not all searches are always fruitful, you can actually write off the expenses that you procured while job hunting.

Medical Expenses

If you have had to pay a high amount in medical expenses this last year, you may actually be able to write them off. However, to qualify, your medical bills must be unreimbursed and must exceed 7.5 percent of your adjusted gross income.

Filing your taxes always seems to be a daunting task for anyone. However, with a little know how and all the right receipts, you can easily file your taxes and get your refund quickly in order to get your finances back on track in the new year.

Why You Should Stick to Those New Year's Resolutions

If you are serious about your personal finance, it may be in your best interest to stick to a few of those New Year's resolutions that you made this year. While many make their resolutions in vain and give up after a few short weeks, choosing to stick with your resolutions can actually help you increase that personal net worth – even more so than switching car insurance policies or putting away an extra $5 a week. Here are a few ways that some of the most popular New Year's resolutions can save you money:

Losing Weight

Losing weight affects more than just your waistline. Choosing to shed a few pounds can actually save you a substantial amount of money long-term. In addition to reducing the amount of money spent on eating out and your regular grocery bill, choosing to lose weight will also reduce the amount you will spend at the doctor's office in the future. Having a lower BMI will also help you qualify for cheaper health insurance rates which can easily save you a couple hundred dollars a year.

Quitting Smoking

There is no denying that smoking is an expensive habit. Depending on where you live, a pack of smokes can reach nearly the $8 mark, and if you are a heavy smoker, that's over $200 a month you are spending on cigarettes. In addition to the outright cost of cigarettes, smoking can also lead to numerous health conditions that can lead to high medical bills in the future.

Getting Out of Debt

Sticking with your goal of getting out of debt is going to save you for obvious reasons – the quicker you pay down debt, the less money you will have to spend on high interest rates. However, paying down debt can help you save money in a few other, less known ways. By having a lower debt-to-income ratio, you are more likely to be approved to lower mortgage and car loan rates which will save you money, and it will also help you keep your credit score high which will keep you from having to pay steep deposits with your electric company or phone service provider.

We all want to keep our finances out of the red, and for many, choosing to stick to those New Year's resolutions is a great way to keep a few extra dollars in their pockets. So before you give up on that resolution yet again, think about how not choosing to follow through will affect your wallet. You just may find that the calculated dollar sign is enough motivation to push through.