9 Ways to Build Wealth in 2011

by Dana Dratch

Want to build some wealth in 2011? Revisit those New Year's resolutions.

You probably haven't thought about your pledges in more than a month. But odds are at least one of them involves getting rid of debt, increasing your income or building some financial security.

To help you out, nine experts in the fields of money, debt, real estate and consumer affairs have shared their best wealth-building tips for 2011.

1. Funnel That FICA Cut Into a Retirement Windfall

David Bendix, CPA/PFS, CFP, president of The Bendix Financial Group:

Take the money you won't pay in FICA, or Federal Insurance Contributions Act, taxes this year and redirect it to your 401(k). "It's a great concept that you're taking that 2 percent and using it to fund your retirement," he says. "It's one great technique for the coming year."

[Click here to check savings products and rates in your area.]

Tip for success: For the maximum impact, talk with human resources ASAP and change your deductions, Bendix says. One hopes the habit of saving a little more will stick with you through next year, too, he says.

2. Look For Low-Cost Mutual Funds and Watch Those Fees

Jill Gianola, CFP, owner of Gianola Financial Planning, LLC, and author of "The Young Couple's Guide to Growing Rich Together":

"One of my favorite ways to build wealth is to pay close attention to the cost of investing and stick to low-cost, no-load mutual funds," she says.

One example: "If you invested $10,000 in small-cap, value funds with a commission and higher-than-average operating expenses and earned 7 percent a year for 10 years, your balance would be $16,005 and you would have paid a sales charge of $575 and $1,890 in operating expenses," she says.

"Compare that to investing the same amount for the same time period earning the same return in a no-load, small-cap, value fund with low operating expenses," she says. "Your balance would be $19,128 and you would have paid $408 in operating expenses." The difference: $3,123.

Tip for success: Calculate cost and differences with Bankrate's mutual fund fees calculator.

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3. No Shortcuts: Year After Year of Consistent Savings

Ric Edelman, chairman and CEO of Edelman Financial Services LLC, and author of "The Truth About Money":

"The best way to build wealth remains unchanged: Invest as much money as you can (which is usually more than you think you can) into a diversified set of low-cost mutual funds and exchange-traded funds -- and keep doing this for many years, no matter what."

4. Get Rid of High-Interest Card Debt

David Jones, president of the Association of Independent Consumer Credit Counseling Agencies:

"For most people, building wealth is not about what to do with excess disposable income," he says, but "how to keep more of the money that they earn."

"The best way to do that: Reduce the amount of money spent on interest payments -- especially high-interest payments attached to credit card purchases," Jones says. "If a consumer can work to pay off just one high-interest credit card and not overcharge it again, then the money saved after it is paid off can go to a building-wealth plan. This may not be easy, and it may take time, but it's a realistic goal for just about every consumer."

Tip for success: Find a certified credit counselor to help you draft your own personal spending plan for free. To find one, visit either the AICCCA or the National Foundation for Credit Counseling.

"If the consumer sticks to that plan, it will be their best chance to begin a systematic process for building wealth," Jones says. "It may be modest at first, but with diligence, everyone can have a chance to improve their financial circumstances."

5. Buy a Home

Ron Phipps, president of the National Association of Realtors and principal broker for Phipps Realty in Warwick, R.I.:

Want to build wealth in 2011? Buy a home, Phipps says. Mortgage rates are low, selection is great, prices are about one-third lower than five years ago, "and, by the way, you can live in the investment," he says.

Homeownership remains a long-term vehicle to financial independence and wealth, Phipps says.

Tip for success: Even though it sounds "pretty elementary," it's especially vital to "use common sense when buying and selling," Phipps says. "Price at the market to sell. Buy what you need and can afford."

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6. Balanced, Diversified Portfolio Plus Education

Karen Altfest, CFP, principal adviser and executive vice president of client relations at Altfest Personal Wealth Management, a fee-only financial planning firm based in New York:

"Have a balanced portfolio," Altfest says. "So many people think that as they get older, money will come from interest. The secret is (keeping) a well-balanced, diversified portfolio and learning what it all means."

Too many times, people take the "set it and forget it" approach with their retirement accounts, she says. But you shouldn't "let it get cobwebs because you can't deal with it," Altfest says. "Get help." Your goal for the year: Get educated about what's in your retirement accounts and why.

Tip for success: You don't solely want only fixed-rate instruments such as bonds and CDs, she says, because it takes more than compounding interest to build a retirement fund.

7. If You Have an HSA, Max It Out

Eric Tyson, author of "Investing for Dummies" and "Personal Finance for Dummies":

"I'm a very big fan of (health savings accounts) because they offer better potential tax benefits than a traditional retirement fund," Tyson says. With HSAs, investors receive an upfront tax break, compounding investment earning, and pay no tax on the money that is withdrawn "as long as its use is for health expenses," he says.

But the device might not work for everyone. "Obviously, you have to have a high-deductible health plan," he says.

Before 65, if you pull money from your HSA for nonhealth expenses, you'll pay income tax and a 20 percent penalty on the withdrawal. After 65 (or in cases of death or disability), such withdrawals are taxed as income -- without the 20 percent penalty.

The maximum you can put into an HSA in 2011 is $3,050 for an individual account (plus an extra $1,000 if you're 55 or older), and $6,150 for a family account, he says.

8. Do Your Due Diligence

John Breyault, director of the National Consumer League's Fraud Center:

To build wealth that you can rely on, vet the adviser and the investment thoroughly, Breyault recommends. Some red flags:

• Guaranteed returns. "There's no such thing as a guaranteed return," he says.

• Pressure. "If it's a good investment opportunity today, it will be a good investment opportunity tomorrow."

• Nothing in writing or a reluctance to share information you could present to a third-party. "If it's a significant sum of money, I wouldn't hesitate to run it by an attorney," Breyault says.

• A significant upfront sum. "You shouldn't have to invest more than you're comfortable with," he says.

Also, "you should be able to get your money out easily," Breyault says.

Tip for success: Run investments and their representatives past state protection agencies such as the office of consumer protection and the state attorney general's office, he says. Also check with business sources such as the Chamber of Commerce and the Better Business Bureau.

Check with regulating authorities such as the Financial Industry Regulatory Authority, or FINRA, BrokerCheck, the Federal Communications Commission and the Securities and Exchange Commission. And verify any degrees and accreditations directly with the bodies that offer them.

And run a Google search on the company name, principals and basics of the investment.

9. Start Your Own Side Business

Robert Pagliarini, CFP, president of Pacifica Wealth Advisors and author of "The Other 8 Hours: Maximize Your Free Time to Create New Wealth and Purpose":

"Start a business in your free time," he says. "I'm a big proponent of having a side venture, something you are passionate about that you can work on after your 'day job.'

"I think this is the best advice to give someone now -- especially for those who are unemployed," Pagliarini says. "And starting a business doesn't have to cost much, if any, money."

With Retirement Savings, It's a Sprint to the Finish

by Tara Siegel Bernard

What would you do if your financial planner prescribed the following advice? Save and invest diligently for 30 years, then cross your fingers and pray your investments will double over the last decade before you retire.

You might as well go to Las Vegas.

Yet that's exactly what many professionals and fancy financial calculators have been telling consumers for years, argues Michael Kitces, director of research at the Pinnacle Advisory Group in Columbia, Md., who recently illustrated this notion in his blog, Nerd's Eye View.

The advice is never delivered in those exact words, of course. Instead, this is the more familiar refrain: save a healthy slice of your salary from the start of your career, invest it in a diversified portfolio and then you should be able to retire with relative ease.

The problem is that even if you do everything right and save at a respectable rate, you're still relying on the market to push you to the finish line in the last decade before retirement. Why? Reaching your goal is highly dependent on the power of compounding — or the snowball effect, where your pile of money grows at a faster clip as more interest (or investment growth) grows on top of more interest. In fact, you're actually counting on your savings, in real dollars and cents, to double during that home stretch.

But if you're dealt a bad set of returns during an extended period of time just before you retire or shortly thereafter, your plan could be thrown wildly off track. Many baby boomers know the feeling all too well, given the stock market's weak showing during the last decade.

"The way the math really works out is unbelievably dependent on the final few years," Mr. Kitces said. "I just don't think we've really acknowledged just what a leap the very last part really is."

Consider the numbers for a 26-year-old who earns $40,000 annually, with a long-term savings target of $1 million. To get there, she's told to save 8 percent of her salary each year over her 40-year career. (We assumed an annual investment return of 7 percent, and 3 percent annual salary growth, to keep pace with inflation). Yet after 31 years of diligent savings, her portfolio is worth just slightly more than $483,000.

To clear the $1 million mark, her portfolio essentially must double in the nine years before she retires, and the market must cooperate (unless she finds a way to travel back in time and significantly increase her savings).

Should the markets misbehave, however, delivering a mere 2 percent return over the 10 years before retirement (not all that hard to imagine, considering the return of a portfolio split between stock and bonds over the last decade), she falls short by about a third. Her portfolio would be worth only about $640,000. The chart accompanying this column illustrates this.

You can quibble with our assumptions in this example. But a similar pattern emerges regardless of your financial targets and projected returns, Mr. Kitces says. So if your target is to save $500,000 or $2 million, and if you assume a 6 percent return or a higher 10 percent, you're still relying on your investments to roughly double in the final years before retirement.

Of course, an extended period of dismal returns during any point in your career can inflict damage. But the homestretch before retirement is often the most anxiety-inducing because workers have neither the time nor the financial capacity to recover before they begin taking withdrawals. "Getting the bad 2 percent decade in the earlier years has far less impact because there are fewer contributions already invested," Mr. Kitces said. "Conversely, when the bad returns come in the final 10 years, no reasonable amount of savings will make up the shortfall."

So what's an investor to do about all of this, especially as one of the other pillars of retirement savings — pensions — disappears? And who's to say how Social Security may change by the time that 26-year-old retires?

Most of the solutions, if you can call them that, fall into the "easier said than done" category. If you can't handle the uncertainty of missing your financial targets, you can try to save more and create a less volatile portfolio, Mr. Kitces says, which may also provide a firmer retirement date.

And naturally, the earlier you start saving, the sooner you're likely to reach the critical mass you'll need for compounding to accelerate (assuming the markets provide some lift in the first half of your career). But you will still need to save more than many retirement calculators suggest, since they're likely to recommend saving a lower amount when you have such a long time horizon. Then you can end up in the same predicament, where you are heavily leaning on market returns in the years before retirement.

"What the wise person does is save a large amount of money when they are young," said William Bernstein, author of The Investor's Manifesto: Preparing for Prosperity, Armageddon and Everything in Between and other investing books. "And if they can do that, when they are older, they can cut back on their equity allocation. When you've won the game, you stop playing the game."

But that can be hard to accomplish when you have other needs competing for those dollars, whether it's a down payment for a house, a 529 college savings plan or starting a business. Or perhaps you're already living on less because you're unemployed (or underemployed) or because health insurance consumes a significant chunk of your income.

"It's the cruel irony of retirement planning that those people who most need the markets' help have the least financial capacity to take the risk," said Milo Benningfield, a financial planner in San Francisco. "Meanwhile, the people who can afford the risk are the ones who least need to take it."

A more prudent course of action is a flexible one that acknowledges the many possibilities and accounts for ideal and less-than-ideal spending amounts.

Try using different assumptions for the years leading up to retirement, suggests Scott Hanson, a financial planner at Hanson McClain in Sacramento. If you want to retire in 25 years, for instance, you might use a return assumption of 8 percent for the first 15 years of savings, then reduce that rate to 6 percent or less in the final decade, he says.

"Here's the catch: most folks aren't saving enough using standard growth assumptions," he said. "If they begin to use lower growth assumptions in order to ensure their retirement, they'll fall further behind and become even more discouraged."

But simply going through these exercises may help the reality sink in. At the very least, it will show how imprecise even the most sophisticated projections may be.

"The actual date I get to check out with my target sum to retirement is much more uncertain than we give it credit to be," Mr. Kitces said. "It's more like 40 years, plus or minus five to 10 years. If you want more certainty, you can have it, but you have to save more and take less risk."

7 Ways to Make Extra Money in 2011

by Kimberly Palmer

Job security might be out, but freelance, contract, and temporary work is in, which makes it easier than ever to moonlight as a graphic designer while you spend your days as a public relations rep. Slimmer staffs mean companies often need the extra help, and new websites offer free tools that match potential employers with workers. And earning extra money beyond your steady paycheck, if you're lucky enough to have one, can provide a big boost to your financial security.

Here are seven ways to make extra money off the new economy in 2011:

Launch a Brand
When Kimberly Seals-Allers, former senior editor at Essence magazine, was expecting her first child, she discovered that black women face higher risks during childbirth and pregnancy. "I realized we were a special group, and I wanted to write a book about everything in black women's lives. Not just pregnancy, but money, men, and myths in our community. [I wanted] to create a new way forward."

Her first book, "The Mocha Manual to a Fabulous Pregnancy," turned into a series as well as an online magazine, maternity line, and consultancy. Seals-Allers also licensed use of the Mocha Manual name to create an instructional DVD sold at Walmart and supermarkets.

Start a Blog

The anonymous blogger behind Lazy Man and Money defies his site's name. He works about 14 hours a day on weekdays and then puts in nine hours on Saturday and Sunday. But his hard work is paying off -- his blog earns him enough to support his lifestyle; back in 2008, he estimated his annual earnings at around $30,000. But it's tough for part-time bloggers with full-time jobs to keep up with all the demands of a lucrative blog. "There's simply a lot more [to do] than what the average reader sees," he says.

Even if the blog itself doesn't generate a six-figure salary, it can lead to other money-making opportunities, such as consulting or speaking gigs. Silicon Valley Blogger at The Digerati Life has carved out a successful niche as the expert on personal finance and technology in Silicon Valley. While she says she didn't earn much during the first six months of her blog's life, she received her first $100 check from Google AdSense shortly after that point, when she was getting around 600 unique visitors a day. She now earns money from her blog-related consulting, as well.

Sell Your Skills
Whether your expertise lies in social networking, editing, or web development, several new websites can help you find potential clients willing to pay you for your work. Elance.com, Odesk.com, and Guru.com make it easy to advertise your skills and find work, which you can do from the comfort of your home at all hours of the night. To get started, explore the websites to see what might be a good fit. You can also stick with a more traditional approach and use Craigslist.org, which allows users to post advertising for their services, ranging from household labor to music lessons.

Sell a Wacky Service
For those interested in a more unusual approach, the innovative website fiverr.com allows users to sell (and buy) services for $5. Current offerings include sketching a stylized portrait, writing a name on a grain of rice, and digitally restoring a photograph. It's one of the trendiest ways to make a quick buck for the internet-savvy; dozens of videos, websites, and blogs offer advice on how best to earn money off the site. The best advice? Since you're only going to make $5 a pop, sell a service that you can do easily and quickly.

Talk and Teach
Colleges, organizations, and companies are constantly on the lookout for new experts that can inspire an audience. If you've built up an expertise on a subject, perhaps through your blog, then consider branching out with some speaking gigs. Offer to talk for free at first to build up your reputation, and then a speakers' bureau can help connect you to paying gigs (for a cut of your fee).

Design T-Shirts

Companies such as CafePress.com allow people to design and sell their T-shirts for a cut of the profits. According to the company's website, some users earn over $100,000 a year. But it's not always easy: Jen Goode, who earns enough through CafePress to pay her mortgage each month, found success after a year and a half of long, sometimes 16-hour days. Her time is spent creating designs and then uploading them. She has uploaded about 2,500 designs, many of which are cartoon oriented, including the popular penguin series. For her, she says, the secret has been to make many different images that are steady sellers, as opposed to creating one or two megahits. Now, she says she doesn't need to put as much time into her shop because she has such a large inventory of designs.

Sell Other People's Products
Make-up companies such as Avon and Mary Kay are always looking for new sales representatives, as are other companies such as kitchen products seller Pampered Chef. "If you don't have to make a big investment to get into it, it's probably not a bad idea," says Marcia Brixey, author of "The Money Therapist." But she warns people to stay away from businesses that require sellers to make significant up-front purchases that they might not be able to unload.

The bottom line: The new economy offers plenty of creative ways to earn extra money; to find the best fit for you, consider your skills, lifestyle, and ambitions.

Reasons to Start a Business This Year

by Rosalind Resnick

But if there's one New Year's resolution you should try to keep this year, it's this one: To start your own business and be your own boss.

Here are good reasons to take the plunge this January instead of procrastinating until 2012.

1. You'll never get laid off again.

Tired of being a number on somebody else's spreadsheet? That won't happen once you start working for yourself. "Jobs used to be for life, and leaving a company to start your own could put your entire career in jeopardy," says David Ronin, co-founder of UpStartBootcamp.com, a New York company that provides coaching, classes and information to first-time entrepreneurs. "Now the average job lasts about four years—if you can get one." On the flip side, most start-ups don't succeed and, while you won't get fired from your own business, you might end up shutting it down and losing the money you invested. "You'll probably take home a smaller salary, work harder and face higher stress levels, too," Mr. Ronin says.

2. You can stop asking your boss for a raise and give yourself one.

When you run your own business, there's no limit to how much money you can make if your company takes off. Because you're taking all the risk, you're entitled to all the upside. "A 'real' job does not have your best interests at heart—ever," says Scott Gerber, a New York entrepreneur and author of "Never Get a 'Real' Job." "Most jobs offer employees nothing more than a false sense of security, a workload that far exceeds their pay grades and a benefits package that they are most likely paying for themselves." While getting a business off the ground is never easy, every dollar that you put in and every hour that you work is an investment that returns profit back to you. "Find me any job that offers that level of financial incentive, and perhaps I'll think of getting a 'real' job," Mr. Gerber says. (Mr. Gerber is also head of Young Entrepreneur Council, which writes a guest column for WSJ.com.)

3. You can write off that new laptop, Blackberry, iPad or printer.

One of the fringe benefits of running your own business is the opportunity to write off or depreciate legitimate business expenses. Recent changes in the tax laws make these deductions even sweeter. Under expanded bonus depreciation rules, qualified investments in fixed assets purchased between Sept. 9, 2010, and Dec. 31, 2011, can be fully written off for federal tax purposes, according to Michael J. Goldberg of New York's Ganer, Grossbach & Ganer LP. (Check with your accountant to make sure your state accepts bonus depreciation for tax purposes.) A new business also can use the Section 179 deduction to write off the price of certain equipment or software, up to $500,000 in 2011. The disadvantage is that the current year Section 179 deduction cannot exceed the net income of the business. Start-up costs of up to $10,000 are deductible once the business begins, Mr. Goldberg adds.

4. You can unplug and work anywhere there's WIFI reception.

Forget the daily grind of commuting to the office. Today's mobile start-ups have unplugged from their digital tether. Small business and social-media marketing consultant Richard Wooley, co-founder of New York's Bond/Wooley Inc., says the key to working virtually is picking your spots—ideally, locations that offer comfy chairs and free WiFi. "When I'm spending an afternoon working through a call list, the best place for me is an independent coffee shop," Mr. Wooley says. "Starbucks can get too noisy to have a real conversation on a cell phone." By contrast, Mr. Wooley finds a quiet bar the perfect setting for crunching complex formulas in the Excel spreadsheets he prepares for clients' business plans. Says Mr. Wooley, "The key is to take off the shackles of a cubicle, charge your laptop battery and get out in the world."

5. There's never been a cheaper time to start a business.

Ten years ago, a typical Internet start-up needed $1 million to launch a product and millions more to prove its business model and scale it to profitability or an IPO. Today's start-ups run lean and mean thanks to the plunging cost of technology and a surplus of real estate and talent. "The popular 'lean start-ups' approach favors developing a product and getting it into the hands of customers as quickly and inexpensively as possible," says Mr. Ronin of UpStartBootcamp.com. "Plus, the stigma of freelancing has lifted for both companies and individuals so start-ups can hire top talent on an as-needed, virtual basis. This lets founders hire better talent with more flexibility, reduced office space needs, and lower benefits costs." And thanks to the power of social networking, it's no longer necessary to hire an expensive PR firm to generate press. You can target niche publishers and bloggers instead.

What's Your Billionaire Age?

by Michael Deane

The concept of a billion dollars is pretty hard to fathom, which is okay because about 99.999% of us will never really have to deal with it. According to Forbes, the world has 1,011 billionaires out of nearly seven billion people, so it's not exactly an everyday occurrence. Those that do become billionaires seem to do it through a mixture of ingenuity, intelligence and timing, or they just inherit it. For the rest of us - those working average jobs, investing normally and living an average lifestyle - how long would it take to become a billionaire? Is it even possible?

If you're making around $50,000 per year, it won't take forever to amass a million dollars, and indeed, many people will be able to achieve that in their lifetime. But a billion dollars? That'd be 1,000 lifetimes, kind of. We'll check out a range of jobs in the U.S. and some typical investments to see how long it would take someone to become a billionaire. We'll be using the saving rate of 10% of someone's income for the year, which may be a little bit optimistic, but it gives a good picture of how long it takes to become a billionaire on an average joe's salary.

Teaching Your Way To a Fortune

There are more than one million teachers in the U.S. according to the Bureau of Labor Statistics, and the mean salary for elementary and secondary school teachers is $55,210. If you're a teacher and are able to put aside 10% of your salary every year ($5,521) then it will take around 186 years for you to become a billionaire if you have your money in a long-term savings account paying 5% interest compounded annually. This means, if you start saving when you're fresh out of college and never touch the money, you could be a billionaire when you're 208!

If you invested in a more lucrative vehicle, like the stock market, you can become a billionaire much quicker. Looking at the returns of the Dow Jones over the past 40 years, there is an average return (CAGR) of 6.68% per year. If these returns are similar for the coming years, then the teacher who puts away 10% of his or her salary per month could become a billionaire in just 145 years. If you only wanted to become a millionaire, it would take you between 46 and 47 years in a 5% savings account and around 39 years if you followed the 6.68% returns of the Dow.

High Earners

It seems nearly impossible to become a billionaire making the salary of the average American teacher, but that's not really a surprise. How about if you're in a higher salary range, like a surgeon or another specialized doctor? An average anesthesiologist in the U.S. makes $211,750, according to the BLS, and if that anesthesiologist was able to put away 10% of his or her earnings every year into our savings account it would take around 160 years to become a billionaire.

And if that anesthesiologist put their savings into an index that tracked the Dow, it would still take more than a lifetime at 124 years. With that kind of salary it seems like you just can't get there on hard work alone.

To give you more perspective, it would take a postal worker (mean salary $48,940) around 188-189 years to become a billionaire using a savings account, and 146-147 years investing in the market. It would take a lawyer (mean salary $129,020) 131-132 years to make a billion in the markets, and 168-169 to make a billion in a savings account. So, when you think of it, whether you're a lawyer, a teacher, a postal worker or a surgeon, the great equalizer is that you'll never be a billionaire.

Out of Reach?

So, who can become a billionaire? How much would you have to have on hand every year to invest and be a billionaire at a time where you could still spend it? If you could put away $1 million a year, you're still looking at about 80 years of saving or 64-65 years of investing before the big payoff. Even actors and athletes who can make millions a year, rarely have the staying power to make it every year for 80 years.

So, sorry to come to such a heartbreaking conclusion, but it's hard for anyone to become a billionaire using traditional methods. To see a billion dollars during your lifetime (40 years of saving), you would need to put nearly $5.5 million into a fund that mirrors the Dow's average growth of 6.68%.

The Bottom Line

Though there are over 1,000 billionaires in the world, it's still an exceptional occurrence, and is owing to momentous business dealings, kick-starting an industry, inventing a much-desired service or concept, and other extraordinary events. For the rest of us, maybe we'll just have to make due with a million.

7 Spending Tips From Frugal Billionaires

by Jean Folger

Carlos Slim Helu (Carlos Slim), a telecom tycoon and billionaire with well-known frugal tendencies, has a net worth of $60.6 billion, according to Forbes. Assuming no changes in his net worth, he could spend $1,150 a minute for the next 100 years before he ran out of money. To put this in perspective, he could spend in 13 minutes what a minimum-wage earner brings home after an entire year of the daily grind.

Granted, the world's billionaires (all 1,011 of them) are in the debatably enviable position of having, quite literally, more money than they can possibly spend, yet some are still living well below their means, and save money in surprising places. Even non-billionaires (currently 6,864,605,142 of us) can partake in these seven spending tips from frugal billionaires:

1. Keep Your Home Simple
Billionaires can afford to live in the most exclusive mansions imaginable -- and many do, including Bill Gates' sprawling 66,000 square foot, $147.5 million dollar mansion in Medina, Wash. -- yet frugal billionaires like Warren Buffett choose to keep it simple. Buffett still lives in the five-bedroom house in Omaha that he purchased in 1957 for $31,500. Likewise, Carlos Slim has lived in the same house for more than 40 years.

2. Use Self-Powered or Public Transportation
Thrifty billionaires including John Caudwell, David Cheriton and Chuck Feeney prefer to walk, bike or use public transportation when getting around town. Certainly these wealthy individuals could afford to take a helicopter to their lunch meetings, or ride in chauffeur-driven Bentleys, but they choose to get a little exercise and take advantage of public transportation instead. Good for the bank account and great for the environment.

3. Buy Your Clothes off the Rack
While some people, regardless of their net value, place a huge emphasis on wearing designer clothes and shoes, some frugal billionaires decide it's simply not worth the effort, or expense. You can find David Cheriton, the Stanford professor who matched Google founders Sergey Brin and Larry Page to the venture capitalists at Kleiner, Perkins, Caufield & Byers (resulting in a large reward of Google stock), wearing jeans and a t-shirt.

Ingvar Kamprad, the founder of the furniture company Ikea, avoids wearing suits, and John Caudwell, mobile phone mogul, buys his clothes off the rack instead of spending his wealth on designer clothes.

4. Keep your Scissors Sharp
The average haircut costs about $45, but people can and do spend up to $800 per cut and style. Multiply that by 8.6 (to account for a cut every six weeks) and it adds up to $7,200 per year, not including tips. These billionaires can certainly afford the most stylish haircuts, buy many cannot be bothered by the time it takes or the high price tag for the posh salons. Billionaires like John Caudwell and David Cheriton opt for cutting their own hair at home.

5. Drive a Regular Car
While billionaires like Larry Ellison (co-founder and CEO of Oracle Corporation) enjoy spending millions on cars, boats and planes, others remain low key with their vehicles of choice. Jim Walton (of the Wal-Mart clan) drives a 15-year-old pickup truck. Azim Premji, an Indian business tycoon, reportedly drives a Toyota Corolla. And Ingvar Kamprad of Ikea drives a 10-year-old Volvo. The idea is to buy a dependable car, and drive it into the ground. No need for a different car each day of the week for these frugal billionaires.

6. Skip Luxury Items
It may surprise some of us, but the world's wealthiest person, Carlos Slim (the one who could spend more than a thousand dollars a minute and not run out of money for one hundred years) does not own a yacht or a plane. (Reducing the amount you spend is the easiest way to make your money grow.)

Many other billionaires have chosen to skip these luxury items. Warren Buffett also avoids these lavish material items, stating, "Most toys are just a pain in the neck."

What We Can Learn
Some of the world's billionaires have frugal tendencies. Perhaps this thrifty nature even helped them make some of their money. Regardless, they have chosen to avoid some unnecessary spending (at least on their scale) and the 6,864,605,142 non-billionaires out there can follow suit, eliminating excessive, keep-up-with-the-Jones style spending. No matter what a person's income bracket is, most can usually find a way to cut back on frivolous spending, just like a few frugal billionaires.

The Meaning of Wealth Translated Around the World

by Robert Frank

We like to think the reasons for seeking wealth are universal. Humans, by nature, like to be comfortable, like to have power and like to have the choices and freedoms offered by lots of stuff and money.

Yet it turns out there are some regional variations in the meaning of wealth around the world.

The new Barclay’s Wealth Insights study, released this morning from Barclay’s Wealth and Ledbury Research, finds that the emerging-market rich view wealth very differently from the older-money Europeans and the slightly less nouveaux Americans.

The study surveyed 2,000 people from 20 countries with investible assets of $1.5 million or more. They shared some common themes: a vast majority of rich people from all regions agreed that wealth enables them to buy the best products and that wealth gives them freedom of choice in their life. Most also agreed that wealth is a reward for hard work.

But the differences are more interesting:

Respect
Asians and Latin Americans were more likely (49% and 47%) to say that wealth "allows me to get respect from friends and family." Only 28% of Europeans and 38% of Americans said respect was a byproduct of wealth.

Charity
About three-quarters of respondents in the U.S. and Latin America said wealth enabled them to give to charity. That compares with 57% in Europe and 66% in Asia.

Happiness
About two thirds of Europeans and Americans said wealth made them happy. But it had a greater happiness affect in emerging markets, with 76% of Asians and Latin Americans saying wealth made them happy.

Role Models
Less than half of Americans and Europeans say the wealthy "set an important example to others to be successful." That compares with 71% of Latin Americans and 61% of Asians.

Spending
Wealthy Europeans are far more likely to spend their dough on travel and interior decorating. Latin Americans seem to put the highest spending priority on education, while the U.S. surges above the rest in philanthropy (which the report counts as spending).
We can read several things into the differences. Most obviously, the U.S. has a more formalized and tax-favorable system of philanthropy than the rest of the world. (It is too sweeping to say Americans are the most "generous.")

What is more, the global financial crisis may have tarnished the image of the wealthy -- even among the wealthy. And finally, the longer a country has wealth, the less it craves the attention and respect wealth brings.

5 Secrets of Self-Made Millionaires

By Kristyn Kusek Lewis

They’re just like you. But with lots of money.

When you think “millionaire,” what image comes to mind? For many of us, it’s a flashy Wall Street banker type who flies a private jet, collects cars and lives the kind of decadent lifestyle that would make Donald Trump proud.

But many modern millionaires live in middle-class neighborhoods, work full-time and shop in discount stores like the rest of us. What motivates them isn’t material possessions but the choices that money can bring: “For the rich, it’s not about getting more stuff. It’s about having the freedom to make almost any decision you want,” says T. Harv Eker, author of Secrets of the Millionaire Mind. Wealth means you can send your child to any school or quit a job you don’t like.

According to the Spectrem Wealth Study, an annual survey of America’s wealthy, there are more people living the good life than ever before—the number of millionaires nearly doubled in the last decade. And the rich are getting richer. To make it onto the Forbes 400 list of the richest Americans, a mere billionaire no longer makes the cut. This year you needed a net worth of at least $1.3 billion.


istockphoto.com
If more people are getting richer than ever, why shouldn’t you be one of them? Here, five people who have at least a million dollars in liquid assets share the secrets that helped them get there.

1. Set your sights on where you’re going
Twenty years ago, Jeff Harris hardly seemed on the road to wealth. He was a college dropout who struggled to support his wife, DeAnn, and three kids, working as a grocery store clerk and at a junkyard where he melted scrap metal alongside convicts. “At times we were so broke that we washed our clothes in the bathtub because we couldn’t afford the Laundromat.” Now he’s a 49-year-old investment advisor and multimillionaire in York, South Carolina.

There was one big reason Jeff pulled ahead of the pack: He always knew he’d be rich. The reality is that 80 percent of Americans worth at least $5 million grew up in middle-class or lesser households, just like Jeff.

Wanting to be wealthy is a crucial first step. Says Eker, “The biggest obstacle to wealth is fear. People are afraid to think big, but if you think small, you’ll only achieve small things.”

It all started for Jeff when he met a stockbroker at a Christmas party. “Talking to him, it felt like discovering fire,” he says. “I started reading books about investing during my breaks at the grocery store, and I began putting $25 a month in a mutual fund.” Next he taught a class at a local community college on investing. His students became his first clients, which led to his investment practice. “There were lots of struggles,” says Jeff, “but what got me through it was believing with all my heart that I would succeed.”

2. Educate yourself
When Steve Maxwell graduated from college, he had an engineering degree and a high-tech job—but he couldn’t balance his checkbook. “I took one finance class in college but dropped it to go on a ski trip,” says the 45-year-old father of three, who lives in Windsor, Colorado. “I actually had to go to my bank and ask them to teach me how to read my statement.”

One of the biggest obstacles to making money is not understanding it: Thousands of us avoid investing because we just don’t get it. But to make money, you must be financially literate. “It bothered me that I didn’t understand this stuff,” says Steve, “so I read books and magazines about money management and investing, and I asked every financial whiz I knew to explain things to me.”

He and his wife started applying the lessons: They made a point to live below their means. They never bought on impulse, always negotiated better deals (on their cars, cable bills, furniture) and stayed in their home long after they could afford a more expensive one. They also put 20 percent of their annual salary into investments.

Within ten years, they were millionaires, and people were coming to Steve for advice. “Someone would say, ‘I need to refinance my house—what should I do?’ A lot of times, I wouldn’t know the answer, but I’d go find it and learn something in the process,” he says.

In 2003, Steve quit his job to become part owner of a company that holds personal finance seminars for employees of corporations like Wal-Mart. He also started going to real estate investment seminars, and it’s paid off: He now owns $30 million worth of investment properties, including apartment complexes, a shopping mall and a quarry.

“I was an engineer who never thought this life was possible, but all it truly takes is a little self-education,” says Steve. “You can do anything once you understand the basics.”

3. Passion pays off
In 1995, Jill Blashack Strahan and her husband were barely making ends meet. Like so many of us, Jill was eager to discover her purpose, so she splurged on a session with a life coach. “When I told her my goal was to make $30,000 a year, she said I was setting the bar too low. I needed to focus on my passion, not on the paycheck.”

Jill, who lives with her son in Alexandria, Minnesota, owned a gift basket company and earned just $15,000 a year. She noticed when she let potential buyers taste the food items, the baskets sold like crazy. Jill thought, Why not sell the food directly to customers in a fun setting?

With $6,000 in savings, a bank loan and a friend’s investment, Jill started packaging gourmet foods in a backyard shed and selling them at taste-testing parties. It wasn’t easy. “I remember sitting outside one day, thinking we were three months behind on our house payment, I had two employees I couldn’t pay, and I ought to get a real job. But then I thought, No, this is your dream. Recommit and get to work.”

She stuck with it, even after her husband died three years later. “I live by the law of abundance, meaning that even when there are challenges in life, I look for the win-win,” she says.

The positive attitude worked: Jill’s backyard company, Tastefully Simple, is now a direct-sales business, with $120 million in sales last year. And Jill was named one of the top 25 female business owners in North America by Fast Company magazine.

According to research by Thomas J. Stanley, author of The Millionaire Mind, over 80 percent of millionaires say they never would have been successful if their vocation wasn’t something they cared about.

4. Grow your money
Most of us know the never-ending cycle of living paycheck to paycheck. “The fastest way to get out of that pattern is to make extra money for the specific purpose of reinvesting in yourself,” says Loral Langemeier, author of The Millionaire Maker. In other words, earmark some money for the sole purpose of investing it in a place where it will grow dramatically—like a business or real estate.

There are endless ways to make extra money for investing—you just have to be willing to do the work. “Everyone has a marketable skill,” says Langemeier. “When I started out, I had a tutoring business, seeing clients in the morning before work and on my lunch break.”

A little moonlighting cash really can grow into a million. Twenty-five years ago, Rick Sikorski dreamed of owning a personal training business. “I rented a tiny studio where I charged $15 an hour,” he says. When money started trickling in, he squirreled it away instead of spending it, putting it all back into the business. Rick’s 400-square-foot studio is now Fitness Together, a franchise based in Highlands Ranch, Colorado, with more than 360 locations worldwide. And he’s worth over $40 million.

When extra money rolls in, it’s easy to think, Now I can buy that new TV. But if you want to get rich, you need to pay yourself first, by putting money where it will work hard for you—whether that’s in your retirement fund, a side business or investments like real estate.

5. No guts, no glory
Last summer, Dave Lindahl footed the bill for 18 relatives at a fancy mansion in the Adirondacks. One night, his dad looked out at the scenery and joked, “I can’t believe we used to call you the black sheep!”

At 29, Dave was broke, living in a small apartment near Boston and wondering what to do after ten years in a local rock band. “I looked around and thought, If I don’t do something, I’ll be stuck here forever.”

He started a landscape company, buying his equipment on credit. When business literally froze over that winter, a banker friend asked if he’d like to renovate a foreclosed home. “I’m a terrible carpenter, but I needed the money, so I went to some free seminars at Home Depot and figured it out as I went,” he says.

After a few more renovations, it occurred to him: Why not buy the homes and sell them for profit? He took a risk and bought his first property. Using the proceeds, he bought another, and another. Twelve years later, he owns apartment buildings, worth $143 million, in eight states.

The Biggest Secret? Stop spending.
Every millionaire we spoke to has one thing in common: Not a single one spends needlessly. Real estate investor Dave Lindahl drives a Ford Explorer and says his middle-class neighbors would be shocked to learn how much he’s worth. Fitness mogul Rick Sikorski can’t fathom why anyone would buy bottled water. Steve Maxwell, the finance teacher, looked at a $1.5 million home but decided to buy one for half the price because “a house with double the cost wouldn’t give me double the enjoyment.”

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Dumbest Things You Do With Your Money

by Kathy Kristof

Brad Klontz knows all about the dumb things that smart people do with their money: He's a smart guy (with a doctorate in psychology) who lost half of his assets in the technology stock bubble.

A financial psychologist, Klontz says that when it comes to money smarts, size matters: The logical part of your brain is so much smaller than the emotional side that it's like "a circus performer riding an elephant." To make smart decisions about your finances, you need the logical side to dominate. But once you get tweaked by greed or fear, that elephantine emotional brain is likely to run amok.

That's why otherwise intelligent people chase get-rich fantasies. Or cling to stocks that are long past their expiration dates. Or find other ways to let fear and superstition keep them from smarter financial moves. Here are nine of these common, emotionally driven money mistakes — plus some tricks from experts for getting that elephant in line.

1. Falling in Love ... With Your Investments

It can be great to fall in love with a person, but stocks can get you into deep trouble. Newport Beach, Calif., financial planner Laura Tarbox says she sees this all the time: Some clients keep concentrated stock holdings because they inherited them and "Mom just loved IBM," or because they work for the company and feel that selling would be disloyal.

Then there's the couple who came to her asking for help investing $12 million. "That sounded really great until we found out that this couple used to have more than $1 billion," Tarbox says. "All their money had been invested in a company that the husband helped launch — and he couldn't convince himself to diversify when he walked away."

Sorry, but that relationship just won't work, says Tarbox. No one should have more than 10 percent of his or her wealth locked in one stock. Just ask the former employees of Enron, who lost both their jobs and their retirement savings when the company filed for bankruptcy 10 years ago.

2. Chasing a Fantasy

You've read it 100 times: "Past performance is not an indication of future returns." But no one appears to believe it. Purveyors of investment data can trot out tons of statistics showing that when a mutual fund or asset class (such as gold, emerging markets stocks, or junk bonds) gets singled out for great quarterly or annual returns, investors start to pour money into that investment like it was going out of style.

And, of course, it is. One extensive study that looked at 19 years of market data found that investors consistently poured money into "hot" investments just as they were about to turn cold. That left the average investor with returns that fell way below the market as a whole and didn't even keep up with inflation. (For more on this, see our recent story "The Biggest Mistake Investors Make.")

Klontz admits that this is why he lost his shirt in technology stocks. It's a natural inclination to "run with the herd," he says with a shrug. Maybe so, but if you don't want to get trampled, you have to devise an investment strategy that suits your goals and then stick to it, even as your neighbor gets (temporarily) rich on the investment du jour.

3. Equating "On Sale" With "Good Deal"

Consider two television sets: Both are $500, but one is marked down from $800. Which one do you buy? If you're being reasonable, you buy the one that got the better rating in Consumer Reports. But most people buy the one that's on sale, says Matt Wallaert, a consultant for LendingTree, which owns the money management Web site Thrive. In fact, even people who would never have spent $500 on a television often will when it's discounted — simply because it's so cheap!

In reality, $500 is $500. If you wouldn't normally spend that much on a television (or any product, for that matter), you shouldn't do it now. We've been fooled by "anchoring": the illogical, but nearly inescapable, tendency to base our estimates of value on the nearest number we see, rather than an independent assessment. Just because the tag has $800 crossed out and replaced by $500, that doesn't mean $800 was a meaningful price. Indeed, an MIT experiment revealed that students who wrote down the last two digits of their Social Security numbers based their estimates of a wine bottle's worth on those two random numbers. The higher their numbers, the more the students were willing to bid for the wine.

Before you pull out your checkbook to splurge at a sale, evaluate whether the product, be it a television or a bread machine, is worth that price in enjoyment. Consider how often you'll use it, for instance, and whether you can get something of similar quality for less.

4. Retaliatory Spending

You don't need it. You don't want it. But, dang it, no one is going to tell you that you can't have it. New York psychologist Bonnie Eaker Weil calls it "POP" spending — for "pissed-off purchases." She did a survey before publishing her latest book, Financial Infidelity, and estimated from the results that POP spending accounts for about $424 billion in purchases each year.

One of Weil's Brooklyn-based clients, for example, went on a retaliatory $500 shopping spree when her husband gave one of her beat-up old jackets to charity without asking her first. When she got home, she informed him that since he didn't like her old jacket, she had gotten a new one from Saks Fifth Avenue. Such purchases can also result from a fight with your boss, mother, or best friend, according to Weil.

But as good as retaliatory spending may feel, it can do real damage to your financial health. Tarbox says a better approach is to talk out the anger, hurt, or disappointment — or just your bad day — with a friend, or even a professional counselor. If you have to spend money on a psychologist, it's probably still cheaper than the golf clubs or designer shoes you put on your credit card after that last argument with the boss.

5. Hanging On to Debt

The number of people who have money in savings accounts, earning less than 2 percent, while carrying debt on credit cards that charge more than 14 percent is "shocking," Wallaert says. Of Thrive's customers who have more than $500 in credit card debt, almost 40 percent have more than enough in savings to pay it off, he says.

Wallaert connects this mistake to "mental accounting" that separates our money into different stacks that we think ought to stay separate. But illogical separations can create mathematical mayhem.

Consider a person with $5,000 in credit card debt and $10,000 in savings. The debt costs him 14 percent per year, or $700, but the $10,000 in savings earns just 2 percent annually, or $200. He could pay off the debt, saving the $700, and still earn $100 annually on the remaining $5,000 in savings. Net result: He's immediately $600 richer and can start saving faster.

You might argue that you need those savings for emergencies. And you do need some emergency savings, allows Frank C. Presson III, a financial planner in Tucson, Ariz. But if you've got considerably more savings than debt, there's no excuse. Keep one month's worth of living expenses in the bank, even at those sorry returns, Presson advises. Use the rest to pay off the high-cost debt. Then rebuild the emergency savings, not the debt. Worst-case scenario: You still have the credit cards (now with zero balances), and you can tap them in an emergency.

6. Parental Martyrdom

An emerging problem involves parents who spend themselves to the edge of insolvency bailing out their children. "It starts from a good place, basically from wanting to be a good parent," Klontz says. "They'll say that Johnny is going through a rough patch and needs some help. But it becomes financial enabling."

Worse, it often causes the parents to suffer money woes that keep them from retiring or living comfortably because they're constantly paying Johnny's bills.

Any time you help an adult child, you should have a clear idea of how much help is necessary, how long it will be required, how it will help the child get back on his or her feet, and when (or whether) the child will have to pay you back. When there's no plan — just an open checkbook or couch — you turn the child into a dependent who becomes increasingly incapable of taking care of himself, Klontz says.

"I talk to the parents about how their attempts to help are like giving a drink to an alcoholic because his hand is shaking. This kind of helping is hurting," he says. "Then we talk about what kind of help would really help." (Hint: That kind generally doesn't involve cash.)

7. Cyber Insecurity

Roughly half the world has signed on for free online banking, which makes money management easier and saves the typical consumer about $50 annually in postage stamps. Among the people who don't use online banking, 41 percent say they've held back because of security concerns, according to a recent survey by Gartner Research.

What do banks typically do to secure online customer accounts? They put up multiple firewalls, which are the equivalent of brick enclosures around your house, and they have techno-security teams attempting to find the weak spots and shore them up. They also patrol the firewalls 24/7, looking for climbers.

Now, let's look at your mailbox. It's probably unlocked and unguarded — just what a thief needs to steal your credit cards. In reality, the chance of becoming a victim of identity theft or financial fraud as the result of low-tech crime — whether it's somebody stealing cards or "spoofing" you into providing private information via e-mail — is a lot greater than the chance that somebody will breach your bank's online vault.

So sign up already and save the stamps. And if you're worried about security, check your account regularly to make sure there's no suspicious activity.

8. State of Denial

Remember when you were 2 years old and you thought you could hide by closing your eyes? When the stock market plunged last winter and spring, that's just what investors did, leaving their quarterly statements sitting unopened on the counter.

If watching too closely would make you abandon a reasoned investment strategy, go ahead and ignore a statement or two. But losses don't go away just because you don't look at them, Tarbox points out. At some point, particularly if you're nearing retirement or need the dough for some other reason, you need to take a look, assess where you are, and figure out what to do about it.

9. Hoarding Money

Children of the Depression did a lot of this — stuffing $20 bills in their bibles or balling up tinfoil and rubber bands so they wouldn't have to buy more. But planners say that this is often a problem with wealthy and responsible older folks today: They're so afraid of running out of money that they don't enjoy the money that they have.

"When people deny themselves things that they could clearly afford, you have to ask them what they're saving that money for," Tarbox says. "We have to tell them that they're not spending enough."

If you're worried about running out of money, sit down with a financial planner and work out the math. Make sure you consider worst-case investment scenarios, not just the averages. That will make you more comfortable about weathering a bad patch like the one we just muddled through. Then, if you still have more than enough, make a plan that will allow you to enjoy your wealth by either spending the excess or giving it away.

Money, after all, is a means to an end — not the end itself. You save it to make you, and the people you love, calm and comfortable. And it's a lot more fun to take the kids and grandkids on vacation — or provide them with college money or other gifts while you're around to get the hugs and kisses — than to know that they'll inherit a fortune after you die.

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10 Part-Time Business Ideas

by Jeremy Quittner and John Tozzi

In any economy, a part-time business can bring in extra income, give you a fallback plan if you lose your job, or plant the seed for a larger venture. In a downturn, it's hard to argue with preparing a backup plan. Of course, starting a business is always risky, and you will almost surely spend more than you make at first. Previously, we offered advice for recently laid-off workers considering going into business for themselves. Now we're offering snapshots of part-time solo business ventures that could turn into full-fledged businesses, including tips on getting started.

Baker
Man does not live by bread alone, or so the saying goes. But if anyone checked the sales of some of the best independent bakeries around the country, they'd be astounded. In 1994, Jim Lahey started Sullivan Street Bakery after several years experimenting as a home baker. Today, his company, which has about $6 million in annual revenues and about 90 employees, is a New York City bread-baking institution. Lahey has a word of warning, though: "Knowledge of cooking is much greater than 20 years ago," he says. "The market is more competitive and if you want to develop a cottage industry, the product better exceed expectations."
And if you want to jump on one of the hottest trends nationally—cupcakes—you might even find yourself selling upwards of 2,000 a day, an amount that New York's famed Magnolia Bakery easily exceeds. At $2 a pop, you can do the math, even for your home-based business.
First steps: Break out your market. Are you going to make muffins and cupcakes or bagels and baguettes? As with most food businesses, you'll need a state license in order to sell to the public. If that seems daunting, you can start by selling to friends and relatives or at local bake sales.You also need to decide how much space you'll need. If you outgrow your home kitchen, consider renting space in a professional kitchen.Time needed: Baking is a time-consuming business, so expect to devote 10 to 20 hours a week on it for part-time work.Average sales: $41,000, based on Labor Dept. data.

Blogger
It's true that few bloggers make enough to earn a living—most make nothing at all. But if you can write well about a topic you're passionate about, you may develop a following, and with enough page views you can start bringing in revenue from ads. Pick a narrow topic that you're intimately familiar with and that has a well-defined audience. For example, a site that covers the world of digital SLR cameras in minute detail has a more natural audience than a broad technology blog; likewise, a general restaurant review site may elicit yawns, while a blog chronicling the seafood shacks of New England could attract a cultish following.First steps: Begin writing and start participating in online communities where people interested in your topic hang out. Start for free on a platform like Blogger or WordPress.Time needed: Prepare to spend at least a few hours each day writing. Keep a regular schedule to make sure your blog doesn't get stale.Average sales: $24,335, based on Economic Census data.

eBay Seller
Yard-sale mavens who already spend weekends trawling for hidden treasures can resell what they salvage online, on eBay or other sites. Pick a niche that interests you and that you have some expertise in and monitor what already sells online so you can set prices accurately. If you know your vinyl, buy old record collections in bulk and resell the gems individually online. From books to electronics, you may be able to find resalable items out on the street on trash night or given away for pennies at moving sales.First steps: Set up a shop on eBay or other e-commerce sites and begin to build your seller rating. It's free to list items on many e-commerce sites, though eventually you may want to invest in your own Web site, advertising, or premium services.Time needed: Expect to spend several hours a week finding inventory and listing it for sale.Average sales: $22,196, based on Economic Census data.

Floral Designer
Turn your love of flowers and colors into bouquets and arrangements for occasions that vary from weddings and bar mitzvahs to confirmations and dinner parties. About one-third of the estimated 87,000 floral designers are self-employed, according to the Labor Dept.First steps: Community colleges, vocational schools, and private floral schools all offer courses in flower design. You'll need to find a source for flowers, too. If you don't live near a flower wholesaler, a growing number now sell online. This is a supply-intensive business. You'll need a workshop space, refrigeration system, and some means of delivering your goods to clients.Time needed: Three to 20 hours per week.Average sales: $21,700, based on Labor Dept. data.

Jewelry Designer
It's probably easier than you think to turn your love of bling into cash on the side. About half of all jewelry makers in the U.S. are self-employed. You can sell online or to thousands of brick-and-mortar retailers.First steps: You'll need design flair, manual dexterity, and attention to detail to get started. Technical and vocational schools offer classes on basics; community colleges also offer courses on design. A clean, well-lit workspace is necessary. Be sure to design pieces in a variety of price ranges. You'll probably spend $500 to $2,000 for materials, from beads and wire to gold and silver to cloth and wax, plus tools like a vise, pliers, and jigs.Time needed: Evenings and weekends.Average sales: $30,000, based on Labor Dept. data.

Pet Sitter
Love animals? Opportunities abound in the pet care industry. Consider walking dogs during the day, grooming or training pets on weekends, or boarding animals overnight. Even if you're not equipped to keep others' pets in your home, you can offer to wash and groom animals at clients' houses, or check in on their pets at their home while they're away. Owners often need someone to watch their pets on weekends and holidays, so pet care can be an easy business to start if you work during the week.First steps: Start by caring for your friends' animals and get referrals through them, because trust is key for people placing their pets in other people's care.Time needed: You can get started working on weekends and evenings.Average sales: $22,183, based on Economic Census data.

Photographer
The barriers to starting a photography business virtually disappeared with the dawn of affordable digital SLR cameras and software like Photoshop. If you're skilled in taking great pictures, pick a niche and build a business around it. You might want to shoot weddings, bar mitzvahs, or corporate events. Or consider family or individual portraits. You could even set up a small studio space in your home. Consider what services you'll offer clients beyond just taking pictures—can you build a Web page to showcase the photos of their event as well?First steps: Put together a portfolio of your existing work to show potential clients.Time needed: For event photography, expect most gigs to be on weekends or evenings (galas, for example). You may be able to arrange portrait appointments on a more flexible schedule.Average sales: $26,259, based on Economic Census data.

Translator or Interpreter
Those who speak more than one language have a ready skill to turn into a part-time business. You can get work translating documents or as an interpreter over the phone or in person. Focus on an area you have some deeper knowledge in. For example, if you have a legal background, angle your business around translating legal documents.First steps: Get a certificate proving your proficiency from the American Translators Assn. and/or the American Council on the Teaching of Foreign Languages.Time needed: Translation work can be done from home on your own schedule, but be prepared to meet client deadlines.Average sales: $21,541, based on Economic Census data.

T-Shirt Vendor
Launching a T-shirt business is about as American as apple pie and your first paper route. Take the Life is Good guys, Bert and John Jacobs, who started out in 1989, selling their shirts door to door, at street fairs, and from the back of their van. Today, the company has about $100 million in annual revenues. T-shirt design is a hotly competitive market, however, and it should go without saying that the barriers to entry are low.First steps: Create a catalog of design ideas, or simply one good one, like the Jacobs brothers, whose smiling stick figure captured the national mood. You need to decide if you will invest in the manufacturing materials or use a third-party designer, frequently known in the trade as a publisher: Lots of these exist, from CafePress to T-Shirt Monster. Using a publisher is cheaper, but you have less control and you'll be handing over most of your profits. On the other hand, investing in your own equipment, including a heat transfer press, can be expensive: $500 to $1,000. Again, this is an intensely crowded and competitive industry.Time needed: Nights and weekends.Average sales: $48,000, based on Economic Census data.

Web Designer
If you're adept at coding and have an eye for sharp design, you make be able to make a business making Web sites—especially if it's something you already do professionally. Begin by building sites for friends and contacts to accumulate a portfolio. Focus on a niche, like designing pages for bands or restaurants, where you can develop a name for yourself in the community and get referrals from your early clients. Decide whether you want to build a one-time site for clients or take on the responsibility of updating and maintaining it, and bill appropriately.First steps: Set up your own Web site with a portfolio of your work.Time needed: You can make your own hours as long as you meet client deadlines—which may mean pulling some all-nighters.Average sales: $42,104, based on Economic Census data.

How to Spend Like a Frugal Millionaire

by Kimberly Palmer


Saving thousands while still spending.
Millionaires make up just 2 percent of the population. They get a bad rap during recessions for being wasteful with their money and are frequently used as examples of excess. It's the millionaires that you don't see that you can learn from in times like these. I call them the frugal millionaires and interviewed 70 of them to uncover ways we can all be smarter with money.
Nearly 70 percent of the economy is based on consumer spending. To keep the economy going we need to keep spending but not waste money in the process. This is where the frugal millionaires come in. They've been smart with their money all along and haven't lost it all and had to remake it. These are the kind of people you want to learn from when it comes to spending your money.
Spending philosophy.
Frugal millionaires are unique thinkers when it comes to spending money: 1) they can easily delay their need for gratification when purchasing; 2) they are resourceful in getting what they want by carefully timing their consumer purchases; 3) they make living below their means painless; 4) they don't like wasting anything (especially money); 5) their sense of "self-entitlement" is highly minimized: and 6) spending is OK with them...depending on what they are buying (think: appreciating vs. depreciating assets).
[For more, see, "10 Secrets of Millionaires' Money Management."]
Buying tips.
These millionaires keep more money than they spend, that's why they are rich. Their tactics work for them so they'll work even better for you. Key Point: They don't view shopping as a sport. They shop efficiently and spend their time doing more important things with their lives. Here are their tips that will help you save while spending:
Cars: Buy used (or off lease) fuel-efficient cars, often with "certified pre-owned" warranties. This warranty can be better than a new car, plus the initial depreciation hit is avoided. Drive the car for a long time and never lease it.
Eating Out: Bring half of a meal home to eat later (this also saves the waistline). Eat at happy hours. Bring wine from home and skip dessert. Value food quality over expensive ambience.
Eating In: Eat better and less expensively by cooking at home. Make it a friends and family event. Get your kids involved. Bonus: You can have that extra drink without worrying about getting busted for driving under the influence. Also: buy day-old bread at the best bakery in town and freeze it. Eat oatmeal, because it's the most cost-effective breakfast food. Get a supermarket "club card" and buy food on special. Play the game of trying to see how much of a discount can be saved off the total food bill.
Clothes: When you buy something new donate something used to charity. Buy traditional clothes, but wait for the off-season to acquire them. Go for high quality - not high price. Buy vintage clothing and avoid logo clothing and keep people guessing who the designer might be. Hint: There shouldn't be one!
[For more, read: "Juggling Your Money in the Recession."]
Consumer Electronics: Buy low-end gear that has the basic functionality of the more expensive stuff. Don't be the first to buy new technology. Wait at least one lifecycle so the bugs are worked out. Buy refurbished electronics whenever possible.
Computers: Buy more mainstream computers with proven technology. Select higher capacity hard drives, a decent amount of RAM (the memory that the program runs in) and a cost effective processor. Super fast doesn't always equal super good...unless you are building airplanes or bridges. Laptops are a good compromise between desktops and netbooks. Don't go through the pain of upgrading operating systems on existing computers, it's not time efficient and you will probably go insane trying.
Going green: Being green and frugal go hand-in-hand. Yet frugal millionaires don't readily fall for the trendy green hype machine. They typically buy green if it helps the environment and lowers their costs. They look at the timeframe when a product can pay for itself. They do use compact fluorescent lighting, turn off lights and equipment that isn't being used, monitor AC and heat usage (with programmable thermostats), drive efficiently, live in "right-sized" homes and turn off the water when they aren't brushing their teeth or washing dishes. Because they have trained themselves to not waste money they won't waste anything else either. They get into good habits and keep them going. You can, too.

Billionaire Clusters

by Duncan Greenberg

Want to become a billionaire? Up your chances by dropping out of college, working at Goldman Sachs or joining Skull & Bones.
Are billionaires born or made? What are the common attributes among the uber-wealthy? Are there any true secrets of the self-made?
We get these questions a lot, and decided it was time to go beyond the broad answers of smarts, ambition and luck by sorting through our database of wealthy individuals in search of bona fide trends. We analyzed everything from the billionaires' parents' professions to where they went to school, their track records in the early stages of their careers and other experiences that may have put them on the path to extreme wealth.
Our admittedly unscientific study of the 657 self-made billionaires we counted in February for our list of the World's Billionaires yielded some interesting results.
First, a significant percentage of billionaires had parents with a high aptitude for math. The ability to crunch numbers is crucial to becoming a billionaire, and mathematical prowess is hereditary. Some of the most common professions among the parents of American billionaires (for whom we could find the information) were engineer, accountant and small-business owner.
Consistent with the rest of the population, more American billionaires were born in the fall than in any other season. However, relatively few billionaires were born in December, traditionally the month with the eighth highest birth rate. This anomaly holds true among billionaires in the U.S. and abroad.
More than 20% of the 292 of the self-made American billionaires on the most recent list of the World's Billionaires have either never started or never completed college. This is especially true of those destined for careers as technology entrepreneurs: Bill Gates, Steve Jobs, Michael Dell, Larry Ellison, and Theodore Waitt.
Billionaires who derive their fortunes from finance make up one of the most highly educated sub-groups: More than 55% of them have graduate degrees. Nearly 90% of those with M.B.A.s obtained their master's degree from one of three Ivy League schools: Harvard, Columbia or U. Penn's Wharton School of Business.
Goldman Sachs has attracted a large share of hungry minds that went on to garner 10-figure fortunes. At least 11 current and recent billionaire financiers worked at Goldman early in their careers, including Edward Lampert, Daniel Och, Tom Steyer and Richard Perry.
Several billionaires suffered a bitter professional setback early in their careers that heightened their fear of failure. Pharmaceutical tycoon R.J. Kirk's first venture was a flop--an experience he regrets but appreciates. "Failure early on is a necessary condition for success, though not a sufficient one," he told Forbes in 2007.
According to a statement read by Phil Falcone during a congressional hearing in November, his botched buyout of a company in Newark in the early 1990s taught him "several valuable lessons that have had a profound impact upon my success as a hedge fund manager."
Several current and former billionaires rounded out their Yale careers as members of Skull and Bones, the secret society portrayed with enigmatic relish by Hollywood in movies like The Skulls and W. Among those who were inducted: investor Edward Lampert, Blackstone co-founder Steven Schwarzman, and FedEx founder Frederick Smith.
Parents Had Math-Related Careers
The ability to crunch numbers is normally a key to becoming a billionaire. Often, mathematical prowess is hereditary. Some of the most common professions among the parents of American billionaires for whom we could find that information were engineer, accountant and small-business owner.
September Birthdays
Of the 380 self-made American tycoons who have appeared on the Forbes list of the World's Billionaires in the past three years, 42 were born in September--more than in any other month. Maybe that's because September is the month the Forbes list of the 400 richest Americans is published.
Tech Titans Who Dropped Out of College
Forget everything your guidance counselor told you: You don't have to go to college to be successful. More than 20% of the self-made American moguls on the most recent list of the World's Billionaires never finished college. Many of them made their fortunes in tech. Among them: Bill Gates, Steve Jobs, Michael Dell, Larry Ellison, (Oracle) and Theodore Waitt (Gateway).
Skull and Bones
Several current and former billionaires rounded out their Yale careers as members of Skull and Bones, the secret society portrayed with enigmatic relish by Hollywood in movies like The Skulls and W. Among those who were inducted: investor Edward Lampert, Blackstone co-founder Steven Schwarzman and FedEx founder Frederick Smith.
Goldman Sachs
A stint at investment bank Goldman Sachs is a prime credential for becoming a finance billionaire. Of the 68 self-made American billionaires that derive their fortunes from finance, at least eight cut their teeth in Goldman's investment banking, trading, or asset management divisions. The company's crown jewel: its "risk arbitrage" unit, which launched the careers of billionaires Edward Lampert and Daniel Och, as well as former billionaires Tom Steyer and Richard Perry.
Click here for the full list of billionaire clusters.

7 Things You're Wasting Money On

by Kelli B. Grant

These days, keeping your budget in line isn’t measured by the amount you spend, but by how much you save.
Before you blame your daily jaunt to Starbucks or weekly trip to the movies for breaking your budget, take a good hard look at how much you’re paying for less obvious but much more expensive money wasters like overdraft fees and auto insurance.
Cut back on these seven items and you could save roughly $1,000 a year.

1) Bottled Water
Getting your recommended eight glasses of water a day by bottle instead of tap is a huge waste of cash, says Phil Lempert, founder of Supermarket Guru. That buck-a-bottle water you down on a regular basis can really add up. (Even more so now that cities like Chicago collect an additional tax of five cents per bottle.)
Potential Savings: Spend $37 to buy a 40-ounce Brita pitcher and filter ($13 at Bed, Bath and Beyond), plus a four-pack of replacement filters ($24), and you'll be able to filter 200 gallons of water. Buy that much water in 24-packs of 16.9-ounce Aquafina bottles at Shop Rite instead, and you’d spend $283.50. Your total savings: $246.50.
2) Extended Warranties
Think twice before you shell out $10 a month for a two-year protection plan on your pricey new BlackBerry. New products tend to malfunction within the manufacturer’s initial warranty period, or well after any extended warranty has expired, says Michael Gartenberg, vice president of strategy and analysis for Interpret LLC, a market researcher. (Most extended warranties exclude accidental damage, too, so you’d still be out of luck if you drop that Blackberry and crack the screen.) To protect yourself, pay with the right credit card. Many credit cards -- including most American Express and MasterCard cards -- double the manufacturer’s warranty on purchases, adding up to another year of free protection.
Potential Savings: Someone buying a 40-inch Samsung flat panel high-def television at Best Buy for $800 has the option to add a four-year protection plan for another $150. Skip it, and pocket the cash instead. (The set already has a one-year manufacturer’s warranty.)
3) Gym Memberships
The cost of a gym membership can really rack up over the course of a year (an average of $775, according to the International Health, Racquet & Sportsclub Association). So make sure you're tapping into all of the discounts available to you. Check with your employer, health insurer and other membership groups like your union or alma mater to see if they offer discounts on gym and fitness club memberships, says Bob Nelson, president of Nelson Motivation, a benefits consulting firm.
Potential Savings: On your own, you’d pay $54.99 per month, plus a $49 enrollment fee, for a national access plan at Bally’s Total Fitness. Through discounter GlobalFit.com, which offers special rates for members of partner companies, you’d pay $37.80 per month plus a $29 enrollment fee for the same Bally’s membership. Over a yearlong membership, that’s $226.28 saved.
4) Overdraft Fees
Overdraft fees can run as high as $35 apiece and banks have a host of sneaky tricks that can cause even the most diligent consumer to overdraw on an account. For example, they may approve debit purchases that would put you in the red, or re-order transactions so that the biggest purchases go through first -- and deposits get processed last. To protect yourself, sign up for overdraft protection, which can cost as little as $5 to $10 a year (and is often free with high-level checking accounts), and can save you hundreds of dollars.
Potential Savings: Pay $5 annually for a connected line of credit at Citibank. It kicks in only when you overspend, helping you to avoid the $30 fee per overdraft. Mess up just four times within a year and you've saved $115.
5) Organic Produce
Sure, buying organic makes you feel like you’re doing the right thing, but it isn't always the best choice for your wallet. Fruits and vegetables like kiwis, sweet corn and broccoli require very little pesticide to grow. Others -- like avocados, onions and pineapples -- have thick or peelable skins that reduce your exposure to harmful chemicals. “Any pesticide that remains is not getting through,” says Lempert. For a handy reminder as you shop, download the Environmental Working Group’s wallet-sized organic produce guide.
Potential Savings: Organic broccoli costs $2.99 per pound at online grocer FreshDirect, which also offers conventional broccoli for $1.49. A pound of navel oranges is $4 for the organic and $2 for conventional. Someone buying a pound of each item weekly could save $182 over the course of a year.
6) Auto Insurance
“[Auto insurers] often give discounts for consumers who don’t drive long distances,” says Sam Belden, a spokesman for Insurance.com. If your driving habits have changed in recent months -- say, you’ve switched jobs or cut out pricey trips to the mall – call your insurer to ask if you now qualify for a better rate.
Potential Savings: A driver who cuts back to fewer than 7,500 miles a year could shave 5% to 15% off his premiums, depending on his insurer. Considering that the average driver shells out $817 a year on auto insurance, according to the Insurance Information Institute, that saves $40.85 to $122.55.
7) Music Downloads
For the longest time, Apple iPod and iPhone owners were stuck downloading their music from iTunes, while consumers with other MP3 players couldn’t put the service’s content on their devices. But now, most online music purveyors (including Apple as of March) offer content in a DRM-free format -- meaning you can listen to it on any MP3 player. That frees iTunes users to pursue cheaper music from sites like Wal-Mart and Amazon.com. Music fans with other MP3 players may benefit from Apple going DRM-free, too. The company plans to revamp its fees in April, charging 69 cents to $1.29 per song instead of the current flat fee of 99 cents. Bottom line: Check prices on several sites before you download.
Potential Savings: “Hot N Cold” by Katy Perry costs 99 cents at iTunes, but just 74 cents at Wal-Mart and 79 cents at Amazon.com. Someone buying a song a week could save $10.40 to $13 annually by shopping around.

10 Financial Myths Busted

by Jeffrey R. Kosnett

Before the economic rout, you could rely on certain iron laws of personal finance. For example, it was a given that house values didn't fall. Money-market funds never lost a dime. And no matter how ugly the market, expert mutual fund managers could protect you from drastic losses.
Alas, in this Hydra-headed global financial crisis, another generally accepted principle of financial strategy or economic logic finds its way into the shredder almost every day. We gathered ten truisms that no longer pass the test.

MYTH 1: There's always a hot market somewhere. When U.S. markets began to blow up, you heard about "decoupling" and "the Chinese century." The idea is that Asia -- or Russia or Latin America -- can grow vigorously independent of the U.S. and Europe. Invest there and you'll offset losses at home. Instead, Chinese, Indian and Russian shares have crumbled. Net investment money flowing into emerging-market economies fell 50% in 2008, to $466 billion, and is forecast to sink to $165 billion in 2009.
Truth: In this age of globalization, economic downturns and bear markets observe no borders.

MYTH 2: Real estate behaves differently from other investments. Call it a bubble instead of a boom if you like, but it was supposed to be "proof" that real estate returns don't strongly correlate with the returns of stocks and other financial investments. The message: Rental properties or real estate investment trusts can make money despite drops in Standard & Poor's 500-stock index or the Nasdaq. Wrong. REITs lost 38% in 2008 because the credit crunch and overly aggressive expansion plans hammered profits and dividends. REIT returns used to have little correlation with the stock market. Now they closely track it.
Truth: Real estate won't overcome other risks when credit problems are harming all investments.

MYTH 3. Reliable dividend payers are safer than other stocks. Companies recognized as dividend "achievers" or "aristocrats" -- because they could be counted on to increase their payouts regularly -- used to perform more steadily than most stocks. That's because shareholders seeking income tended not to sell. But now shares of dividend achievers can be as volatile as the overall market. One reason: more mass trading of blue-chip stocks in baskets, a la exchange-traded and index funds. Another factor: Banks, insurance firms and real estate companies can no longer afford to pay high dividends.
Truth: Companies aren't too proud to stop increasing dividends. If you want stable dividends, ignore the past and look for companies with lots of cash flow.

MYTH 4. Foreign creditors can drain the U.S. Treasury overnight. Puny Treasury yields suggest that it's bad business for the rest of the world to lend so much money to the U.S. But think: What else would these investors do? And who has the power to impose this dramatic sell order? Nobody. Foreigners own $3.1 trillion of Treasury debt. Of that, $1.1 trillion is with private investors -- mainly pension funds, which cannot safely ignore a class of investment that is absolutely liquid and has never defaulted. Governments and institutional investors hold the rest. On occasion they have sold more U.S. debt than they have bought. But massive private buying has overwhelmed the modest pullbacks.
Truth: If what you want is super-safe bonds, the U.S. Treasury is the go-to place.

MYTH 5. Gold is the best place to hide in a lousy economy. In early February, an ounce of gold traded for $910. That's just where it sat a year ago, when world economies weren't so bad off. But foreign and domestic stocks, real estate, oil and riskier classes of bonds have all tanked since, and now gold looks -- ahem -- as good as gold. However, gold does not typically benefit from a recession. As inflation slows, people buy less jewelry, industry uses less gold, and strapped governments sell reserves to raise cash.
Truth: Gold tends to rally in prosperous times, when you have inflation, easy credit and flush buyers (kind of reminds you of real estate. . . ).

MYTH 6. Life insurance is not a good investment. This canard spread as 401(k)s and IRAs supplanted cash-value life insurance as Americans' most popular ways to build savings while deferring taxes. True, the investment side of an insurance policy has higher built-in expenses than mutual funds do. But two factors point to a revival of insurance as an investment. One is guaranteed-interest credits on cash values, which means that if you pay the premiums, you cannot lose money unless the insurance company fails (see "Savings Guarantees You Can Trust," on page 55). The other is the boom in life settlements. If you're older than 65, you can often sell the insurance contract to a third party for several times its cash value -- and pay taxes on the difference at low capital-gains rates.
Truth: A good investment is one in which you put money away now and have more later. Checked your 401(k) lately?

MYTH 7. The economic downturn dooms the dollar to irrelevance. No question, the U.S. is deep in debt and going deeper while the economy contracts. History teaches that when a country can't pay its bills, lags economically and cannot control inflation, its currency loses value. That's why currencies in Argentina, Iceland, Mexico and Russia have all crashed within recent memory. The dollar does swoon, and it's lost punch in places as unexpected as Brazil and India. But -- and here's the surprise -- as recession gripped the U.S., the dol-lar got stronger. For one thing, there aren't many alternatives. For another, some other currencies were temporarily inflated by oil and commodities speculation.
Truth: The dollar has survived a tough test and remains the world's "reserve" currency.

MYTH 8. Mass layoffs reward investors. In the 1990s, news of layoffs would boost a company's stock for several weeks. Stock traders lauded bosses for tightening their belts, so it was smart to buy or hold the shares. But mass firings no longer impress investors. Lately, firms as varied as Allstate, Boeing, Caterpillar, Dell, Macy's, Mattel and Starbucks have all announced enormous layoffs -- only to learn that, if anything, doing so spooks the market even more. For example, on the day in January when Allstate axed 1,000 of its 70,000 employees, its shares fell 21%.
Truth: Don't buy a stock thinking that a layoff will help profits. More likely, trouble's brewing.

MYTH 9. It's crucial to diversify a stock portfolio by investing style. Experts say a sound fund portfolio fills all "style boxes," starting with growth and value. Growth refers to companies with expanding sales and profits. Value describes stocks selling for less than the business is worth. In 1998 and 1999, growth stocks soared and value stocks stalled. Then, for a few years, value rose while growth got crushed. But since 2005, the differences have been melting away. In the current bear market, both styles have been disastrous, and it's hard even to classify stocks as growth or value anymore. Many former growth stocks, such as technology companies, are so cheap that they act like value shares. Banks and real estate, once lumped into value, are a mess.
Truth: Pick mutual funds that are free to search for good prices on stocks, whatever their labels.

MYTH 10. A near-perfect credit score will get you the best loan rate. Before the credit bust, if you could fog a mirror, you could get a mortgage. You know what happened next. But bankers still need to make a buck, so it sounds logical that if you can show a strong credit score, you'll win the best of deals on any kind of loan. Not so. Mortgage lenders prefer large down payments. Credit-card issuers are just as apt to reduce your credit line or raise your interest rate. And those 0% car loans? Often they last for only three years, which puts the payments so high you'll need to come up with more upfront cash anyway.

Truth: Credit is going to be tough to get for a while no matter what. So don't obsess over every few points of your FICO score.

10 Things We Overpay For

by Joan Goldwasser

You can save big by buying cheap alternatives instead.

Does the avalanche of news about layoffs, business losses and a declining stock market have you looking for ways to cut your spending so you can beef up your savings? We're here to help, with suggestions for less-expensive alternatives to ten everyday purchases (for more ideas, go to http://www.billshrink.com/, which tracks cell-phone plans and credit cards).


Afternoon snacks. Do you munch protein bars as a healthier alternative to a chocolate pick-me-up? You could easily be paying more than $2 per bar and consuming just as much sugar as you would with your favorite candy bar. Stock up on fruit for a fraction of the cost when you do your grocery shopping. You'll be fitter and save a bundle.

Bottled water. Yes, it's important to drink water every day. But picking up the bottled variety with your lunch is an expensive way to stay hydrated. Rather than spend $2 a day for water, buy a pitcher and a filter for about $20 and drink as much as you want for pennies a glass.

A caffeine fix. Can't get through the day without at least one cuppa Joe? Stopping at Starbucks or Dunkin' Donuts can set you back as much as $1.65 per cup. Splurge on a pound of gourmet coffee for $8 to $13 and you can make 40 cups for about 20 cents to 33 cents each.

Favorite tunes. Do you rush out to buy the latest CD by your favorite group even though there are only one or two songs you really like? Instead of paying up to $18 for the CD, download those cuts you want from iTunes for 99 cents each, or from Amazon for as little as 79 cents.

A night at the movies. An evening for two at your local theater costs an average of about $20, including the popcorn -- and closer to $30 in major cities. And that doesn't even count the babysitter. For just $5 a month, you can watch two movies from Netflix or pay $9 for unlimited viewing. If you're willing to wait a little longer for new releases, borrow them free from your local library.

Fresh flowers. A bouquet of spring blooms brightens up a room and your mood. But purchasing it from a florist at $25 and up can quickly put a dent in your budget. Check out your local grocery store, which offers a selection of seasonal bouquets for $5 to $10.

Fruits and veggies. Sure, precut vegetables and salad mixes that are washed and bagged save a little time. But you'll pay for the convenience. Broccoli florets and sliced peppers cost $6 per pound, compared with one-third to one-half the price for the uncut versions. Lettuce varieties that are pre-washed and bagged sell for $5.98 a pound. But it takes just minutes to wash and spin dry enough arugula for your evening salad, and you'll pay one-third as much. Buying whole strawberries rather than sliced ones that are prepackaged cuts the price by 75%.

Credit-card fees. Every month, millions of credit-card customers pay their bills late, and they're assessed as much as $39 each time. Set up an automatic debit and you'll never incur another late fee.

ATM fees. Each time you use an out-of-network ATM you pay an average of $3.43. Do that once a week and you'll rack up almost $180 in ATM fees every year. Avoid those charges by selecting a bank with a large ATM network or an online account that reimburses your ATM fees -- such as the eOne no-fee account from Salem Five Direct bank. Another alternative: Get cash back at the grocery store.

Fax and mail services. Instead of paying FedEx $1.49 to fax one page, sign up to send free faxes from a provider such as faxZero or K7.net. Save on shipping with the U.S. Postal Service's priority mail service. You'll pay just $4.95 to mail an envelope or small box anywhere in the U.S., and your parcel is likely to arrive within two days. Larger packages cost $10.35. That saves at least 50% compared with UPS's two-day service, the cost of which varies by weight and distance.

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