When putting together a budget, don’t ignore the small things. Over time, small savings can make a huge difference. If you’re able to cut down just NIS 50 a week from your expenses, that’s a savings of NIS 2,600 a year — not an insignificant sum. Keep track of your expenses very carefully because saving money is only possible if you know where your money is going.
Remember that a shekel saved is worth much more than a shekel earned. In general, Israelis are heavily taxed, and so saving one shekel is the equivalent of up to two shekels of income (especially if your tax rate approaches 40% and you add Bituach Leumi payments on top).
It’s really interesting how many seemingly dissimilar aspects of our life are actually very alike.
A friend was discussing with me his efforts to get in shape and lose weight. Having decided to ‘do the job properly’ he downloaded a calorie counting diet app to help him reach his goal weight.
He set up his preferences, how much weight he would like to lose (or if he wanted to maintain his current weight) and how much exercise he does, and the app tells him what his calorie consumption should be to accomplish his goals. Then, every time he eats or exercises he fills in the relevant details, and the app works out how many more calories he can consume that day to stay on track.
It’s fantastic – he gets the feedback on his lifestyle, and can adjust his day and even his week accordingly. With this increased awareness he can make better decisions to ensure a healthy lifestyle.
And if you parallel that to your financial lifestyle, that’s exactly what proper budgeting and financial planning does – it leads you to a healthy financial way of life. Unfortunately all too often we live our financial lives on a day to day, month to month basis, making short term decisions to get through the month without really thinking through the long term consequences. Our daily needs (which are so often just ‘wants’ disguised as ‘needs’) rule our spending patterns and don’t allow us to see the bigger picture – what we really want to accomplish with our financial resources. How much more effective we would be if we could focus on the longer term goal and ensure that the things that are truly important but are less immediate than our monthly expenses, are still being funded (i.e. saved for).
As soon as you establish and keep to a budget, track your expenses and schedule regular planning sessions, you are setting yourself up for a stable and well-considered financial future. Monitor your expenses and you will have an accurate picture of where you are spending your money. Your increased level of awareness will help you to decide whether your current decision to spend money on an immediate ‘need’ is as important as saving for your kids’ education, weddings, your retirement or even that family vacation next year. It gives you the feedback necessary to determine whether you are on track to reaching your short term or medium range financial plans. Then when you schedule your semi-annual or annual financial planning session, you have the necessary information to assess your financial situation in relation to your personal goals and plans.
There are too many financial apps out there for me to mention with more being developed all the time, but current popular ones are Mint and You Need a Budget (YNAB). Depending on whether you use your computer, tablet or phone to keep track of your expenses, choose an appropriate program or app that works for you and just get started. The apps make it much easier to monitor your spending, so you will have far fewer excuses to explain away your financial hiccups.
Ultimately these apps can help us to ensure that our daily decisions are in line with our long-term goals. The same way we all feel better when we are eating healthier and exercising, we also feel better when our finances take shape.
If you use technology in your day-to-day life then look for an app – it could really help you with your budgeting.
Reconciling your financial records on a regular basis is important no matter where you live, as financial mistakes abound throughout the world. Some suggest that mistakes occur in one out of every ten credit card bills.
We all know how easy it is to not focus on those letters that come from the banks, insurance companies, investment houses and other financial service providers. Not only are they in Hebrew (which in itself is more difficult for the average English speaker) but the legalese and financial terms are downright confusing and in many cases unintelligible.
But when we ignore the letters we then run the risk of significant financial loss. Sometimes it’s a case of picking up banking or credit card errors that can be very important. Other times the institution is complying with its legal responsibility of informing its clients of something, and it becomes the client’s responsibility to follow through.
While letter writing and reading might seem like such a 90’s activity, lost in the internet world of the 21st century, there are still some letters that need to be read – that is if you want to save money and improve your financial standing. And for those bills that you agreed can be sent via email to your inbox – they also need to be opened and checked when they come in. Sometimes it really is the small things that can make a big difference.
Don’t assume the bills are correct. Without checking them, you’re very likely wasting thousands of shekels over time. Personally, I’ve found mistakes in my family’s mortgage statements, bank charges, electricity, phone, water, and other bills. Don’t assume that just because you told someone to do something or to correct an error, he or she did it right! Mistakes happen all the time.
Price differentials between different stores and/or distribution methods can be very significant. Are you paying more than you need to for a specific item or service?
While spending hours to save a few shekels might be overkill, large items and expenses that recur monthly should be properly researched. Prices are incredibly dynamic in Israel, and what you thought was a great price might now not be so favorable. Don’t expect service providers (like your phone or Internet services) to update you when your package deal expires: they usually increase the price without notifying you. Even if they do send notification, you may not understand the documents.
The language barrier can be substantial and you need to compensate for it. Make sure that you understand what you are committing to before signing. Be proactive. Schedule a time to contact your service providers every six or twelve months to ensure you’re getting the best deal. The extra effort can make a substantial difference in many areas of your budget.
The business and consumer environment in Israel is very different from that in many Western countries. Living in the Middle East requires Westerners to change their “fixed price” mentality and start negotiating … on almost all purchases. Ask for discounts at any opportunity. Don’t be embarrassed — that’s the way Israel operates and no one will think any worse of you. These small (and sometimes large) discounts can save you a tremendous amount of money over time.
Shop around — price differentials can be significant even between the larger supermarkets chains. Know what’s cheaper where.
Israel has a thriving second-hand goods market where you can find almost anything that you need to furnish an apartment at a fraction of the original cost. Many olim waste thousands of dollars shipping their possessions to Israel when they can often find more appropriate furniture for Israeli apartments locally cheaper — especially second-hand goods. There are numerous onlinegroups and websites that offer buyers and sellers the ability to connect, in a truly win/win scenario.
Our newsletter goes out approximately once a month, and will keep you informed of changes in the financial and other related markets that might impact you.