Today we have a guest post from Evan who blogs about the stock market and personal finance at stockinvesting101.net.

Technology has made it fairly easy to save money these days. You can set it up to where you have money taken directly from your paycheck and put into retirement accounts or saving accounts. You should be aiming to save at least 15% of your salary, but more is always better.

Deciding on what you should do with the money you are saving is much more difficult. Within the past 10 years tech stocks, the real estate market, and the entire financial sector have crashed so it makes sense that people do not know what to do with their savings.

So what can you do with your money after you have the saving part down?

Welcome to Investing

The general rule is to subtract your age from 110 to determine what percentage of your savings you should invest in the stock market.

If you are thirty years old, it’s suggested you should be investing 80% of your money in the stock market, [110-30= 80%] and the other 20% should be invested in safer, less volatile investments such as bonds and CDs. The 110 rule is great because your portfolio will become slightly more conservative as you get closer to retirement, which is what you should aim for.

What you do with the money that you are investing in the stock market is important. It all comes down to how much time and effort you want to put into your investments.

If you are like me and you have a passion for the stock market, then I suggest you invest in a diversified portfolio of 7-12 individual companies. You will likely end up getting the best returns and the most satisfaction this way.

If you cannot tell a balance sheet from an income statement and you have no urge to know the difference between the two financial documents, investing in index funds or mutual funds is going to be your best bet.

Index funds are passively managed and will mirror the returns of the broader stock market, which is what you should be aiming for. Mutual funds are actively managed, which means there is a person in charge who routinely buys and sells shares of different companies. I’m a fan of index funds because they charge roughly 1/10th of the fees that mutual funds charge. Every percentage point counts in investing, especially over time once compound interest kicks in.

Is Real Estate For Me?

I tend to favor the stock market over real estate as an investment for a few reasons. Historical averages show that over time the stock market may generate an 8% return while real estate tends to average 5-6% annually.

Also, you can buy and sell stock in multiple companies with just a click of a button. Buying real estate takes much more time and effort.

Finally, you will need to pay property taxes on your real estate investment in some cases which will eat into your return.

For some people, saving money is simple. It’s the confusion of the next step that can cause some problems. Hopefully this post helps simplify your next money move.

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What are you doing with the money that you are currently saving and in what changes are you planning on making in the upcoming years?

Thanks again to Evan and make sure to check out StockInvesting101.net!

Photo: AComment

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Here’s some recent blog carnivals FF has been featured in:

Personal Finance By the Book – Carnival of Money Stories 2: Bob Gibson

Budgets Are Sexy – Carnival of Personal Finance: Dollar Doodles

CreditCards.com – Carnival of Personal Finance: March Is the Month of What?!

Being Frugal – Carnival of Personal Finance: Tour of Ireland

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This post originally ran as a guest post at Green Panda Treehouse.

Finding a cheap plane ticket for a vacation or trip abroad is always cause for celebration. However, excessive celebration can blind you from the fact that the plane ticket is just a sliver of the entire travel expense.

The actual travel portion of a trip – plane, bus, gas for the car, subway, etc. – is usually the most expensive aspect of traveling and the most deceiving for budgeting. It is the hidden costs of travel that can cause an exciting adventure to quickly turn into a financial nightmare.

I’ll show you a real life example of this and demonstrate how adding an extra 70% to your travel budget can cause those hidden travel expenses to be handled properly. Leaving home and seeing the world is a  great time in anyone’s life so plan ahead so you can stop worrying about money, and start enjoying your trip.

My girlfriend flew to Japan in September and when researching flight, we found a one-way ticket from Chicago to Tokyo, with a layover in Toronto, for a reasonable price of $484. The excitement set in and we were ecstatic that she would soon be visiting.

However, a second glance at the receipt, as well as consideration of the logistics of her getting to my apartment, made that $484 quickly turn into $1000.

The plane ticket was advertised as $484, but the fees tacked on by the airline were unexpected. Fees for fuel, the USA Transportation tax, and the Canada Airport Improvement Fee caused that affordable plane ticket to actually cost $599 – a 24% increase from the advertised price.

Getting her to my apartment was another financial issue that we overlooked. I’m located eight hours from Tokyo and the cheapest option for getting to my apartment was an overnight bus that cost $90 each way. Add on a round-trip ticket for me, a one-way for her, and we were now out $270 in bus fares.

We also made a weekend trip out of her arrival in Tokyo, so we had to budget around $60 for travel expenses around the city.

The hidden costs added up fast.

Originally, we started with a $484 plane ticket to get her to Japan, but the actual cost of getting her to my apartment was $929 – 91% more than the original ticket price!

By breaking down the numbers to see the true cost of travel, we can see how important it is to take action ahead of time.

How do you deal with these costs?

Plan ahead!

Whatever you think your travel expenses will be – budget for 70% or more. This seems a little steep, but by planning your expenses ahead of time – which means you may have to put that trip off a month or two – you can properly save and avoid using credit cards or student loans for trip expenses.

Don’t let what appears to be a low price for airfare on Kayak or Orbitz deceive you. Right away, add $100 to the price for a rough estimate of taxes and the actual cost of your plane ticket.

Take five minutes to research the cost of getting to your actual destination, not just the airport. Thanks to Google, I could find the exact price of train tickets around Tokyo, the price of an overnight bus, and suggestions for cheapest ways to travel from fellow travelers online. Every site could be translated to English and was simple to navigate. Just five minutes of research can give you a more accurate picture of travel costs, which will prevent you from having to go to your credit card in desperate financial situations.

If you end of saving money on travel because you budgeted too much, congratulations! Have that extra drink on the beach, buy your mom an extra souvenir key chain, or just keep that extra money in your wallet. It’s a good problem to have and you’ll appreciate it when you return home.

Planning trips can be stressful and expensive, but by planning for the biggest expense – the travel portion – you come out ahead in the end. The excitement of a trip should not be held down, so don’t let your travel expenses suppress your adventure.

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Photo by MarinaAvila

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